Alumni of the SOM Academy are well acquainted with the concept of BATNA, the best alternative when you can't reach an agreement at the negotiating table. In the MGA school of negotiation, BATNA has played a fundamental role for over 40 years. This raises the critical question: what is actually the best alternative to the concept of BATNA?
Best Alternative To a Negotiated Agreement Arbitration. Looking through the lens of BATNA (Best Alternative To a Negotiated Agreement) often explains why parties behave in a certain way during negotiations. If they have a good BATNA, they are usually on firmer ground in discussions with other parties; if it is weak, they will more readily compromise. The relationship between BATNAs often largely determines the power dynamics at the table.
RATNA, WATNA, Phantom BATNA, and Casino BATNA
The concept of BATNA is the most common negotiation jargon online. According to Google, it appears 7 times more often than the bestseller Getting to Yes in which it was first mentioned. Being popular is one thing; but being easy to apply is another. Because what exactly is your BATNA if you can’t reach an agreement? If you don’t accept that employer’s offer, is your BATNA being unemployed or getting a better job with another employer? And if you refuse to agree to sell your farm to the province for 130% below market value? Is your BATNA then selling your business to Schiphol for 180%? Expropriation at a much lower price? Or simply continuing to run your business under the current business model? Schiphol seems to be “the best” option here, right? So is that your BATNA? After all, doesn’t the “B” stand for “best”?
It's time for a broader conceptual framework.
Realistic Alternative to a Negotiated Agreement.
This concept assumes you take a very close look at what is truly realistic. So, if you've already been rejected three times in other applications, your RATNA (Realistic Appraisals of Training, Needs, and Aspirations) for the fourth interview is being unemployed, not a dream job elsewhere... With RATNAs, probability calculation is a useful tool: There is a 50% chance that the court will award us EUR 1,000 in damages and a 50% chance that we will receive nothing. That is why we are accepting the offer of EUR 600.
WATNA: Worst Alternative to a Negotiated Agreement.
The future could also turn out very badly. Forced buyout of your farm at a fixed low price, for example. Or stricter regulations that make the business unprofitable and increase debt. Sometimes your BATNA is actually a WATNA...
Phantom BATNA
This is an unrealistic BATNA that the party itself sees as very realistic. The judge will surely rule in my favor; any other outcome would be unjust! This second-hand Billy bookshelf is so special; another buyer will definitely pay the purchase price for it! The interesting thing about Phantom BATNAs is that they do not necessarily disadvantage the party that has the Phantom BATNA. Research shows that people who consciously deceive themselves with a fabricated strong BATNA, on average, achieve more in a negotiation than parties who are realistic about their poor BATNA. Whether this also applies to people who unconsciously have a phantom BATNA is, to my knowledge, unknown.
Casino-BATNA
The most fun BATNA is, of course, the Casino-BATNA. This is a BATNA where a party is aware that there is a high degree of uncertainty associated with not reaching an agreement and simultaneously believes that luck is on their side. We are rejecting this last offer; the housing market will warm up again and in a few months someone will surely offer more. Or this: We don't have to agree because after the upcoming elections, the political winds will shift, and The Hague will surely decide in our favor..
