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Learning from BATNA Examples in Negotiation

Batna examples in negotiation often highlight best and worst practices for analyzing your best alternative to a negotiated agreement. the 2019 college admissions scandal offers one case study—and a research study suggests how to do better..

By PON Staff — on May 30th, 2024 / BATNA

How should you decide whether to accept or reject your counterpart’s final offer in negotiation? In their influential book, Getting to Yes: Negotiating Agreement Without Giving In , Roger Fisher, William Ury, and Bruce Patton advise comparing the deal to your BATNA, or  best alternative to a negotiated agreement . If the offer is better than the best outside option available to you, accept it. If it isn’t, declare impasse and pursue your BATNA.

The BATNA concept offers clear-cut, useful advice. But because BATNAs are often uncertain rather than guaranteed, they can be difficult to assess, as BATNA examples in negotiation sometimes illustrate. The 2019 U.S. college admissions scandal and recent research provides guidance on how to better assess your BATNA. 

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BATNA Examples in Negotiation : A Case Study

In March 2019, 33 parents were accused of conspiring with college consultant William Singer to fraudulently secure their children’s admission at several top U.S. universities. In pre-indictment negotiations, U.S. federal prosecutors tried to convince the parents to plead guilty to a single charge of mail fraud or risk an additional money-laundering charge. 

Fourteen parents pled guilty to the mail-fraud charge, including actress Felicity Huffman, who confessed to paying Singer $15,000 to arrange for cheating on her daughter’s college entrance exam . Huffman was sentenced to 14 days in jail and served about 10 days in October 2019 .

Sixteen other parents rejected the plea deals, including actress Lori Loughlin and her husband, fashion designer J. Mossimo Giannulli, who were accused of paying $500,000 to get their two daughters admitted to the University of Southern California . After rejecting the deals, they were both indicted for money laundering. In May 2020, Loughlin and Giannulli both reversed their decision, pleading guilty to mail fraud; they ended up serving about two and five months in prison, respectively. 

Initially, the two groups of parents appeared to calculate their BATNAs very differently. Those in Huffman’s group correctly predicted that if they refused a plea deal, their BATNA likely would include an additional serious charge and then a choice between a worse plea deal and a stressful trial that could end in a long sentence.

Those in the Loughlin/Giannulli group appeared to incorrectly predict they could secure a BATNA that would not require prison time, whether by negotiating a better deal or winning in court. Given the strong evidence against them, this bet had a low probability of paying off from the start. 

A BATNA in the Hand?

In an article in the journal  Organizational Behavior and Human Decision Processes , Southern Methodist University professor Robin L. Pinkley and her colleagues found that most people have difficulty assessing uncertain BATNAs, or so-called phantom BATNAs , and make subpar decisions as a result. 

In their experiments, participants played the role of job candidates negotiating their starting salary and were told they either possibly had another offer (a “phantom” BATNA), definitely had another offer, or had no other offer. Those who believed they possibly or definitely had another offer felt more powerful and negotiated more aggressively and successfully on salary than those who believed they had a poor BATNA. 

However, participants were often overconfident that their uncertain BATNAs would materialize. As a result, they frequently turned down offers they should have accepted in pursuit of their BATNA, as Loughlin and Giannulli appeared to do. Conversely, people facing  highly likely  phantom BATNAs tended to be overly  pessimistic  that the BATNA would actually pan out—and often settled for the “safe” offer on the table. 

Such irrational thinking has been adaptive in human history: “Strategic optimism” in the face of long odds motivates persistence and resilience, while “strategic pessimism” about a seemingly sure thing protects us from disappointment. In negotiation, however, such biases can lead us to reject offers we should accept and accept offers we should decline.

BATNA Examples in Negotiation : Key Takeaways

The following four guidelines, derived from research and BATNA examples in negotiation , can help you manage the uncertainty surrounding BATNAs:

• Beef up your BATNA. Focus on how to improve your BATNA —for example, by pursuing numerous job leads, interviewing multiple suppliers, or negotiating for several houses rather than one.
• Assess your BATNA’s value and likelihood. To avoid being overly optimistic about an unlikely BATNA and overly pessimistic about a more certain one, gather objective information about your BATNA’s likelihood—and do what you can to make it more likely. 
• Take your counterpart’s BATNA threats seriously. In the college admissions scandal, prosecutors threatened to worsen the parents’ BATNAs if they didn’t plead guilty—and then followed through on those threats. Confront such threats head-on, and try to talk through differences that divide you.
• Assess the other side’s BATNA. If your counterpart tells you about their own phantom BATNA, call attention to any risk or uncertainty associated with it. You might be able to reduce their overconfidence, avoid impasse, and get a better deal.

What have you learned from particular BATNA examples in negotiation?

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BLOG CATEGORY   October 23, 2023 A Complete Guide to BATNA, ZOPA & the Reservation Point

Negotiating can be a challenging endeavor, especially when high stakes are on the line. As the negotiation unfolds, you might encounter situations where it seems the other party has the upper hand. In such moments, you're faced with three choices: accepting the deal without further discussion, walking away from the negotiation table, or introducing a better alternative.

While the first two options are self-explanatory, the third is where the magic happens. BATNA and ZOPA, along with your Reservation Point, can tip the scales in your favor during any negotiation.

What is BATNA in Negotiation?

Before delving into the intricacies of negotiation theory, you may be wondering what is BATNA exactly? Simply put, it's the best alternative to a negotiated agreement (BATNA) that is the most advantageous alternative course of action a party can take if an agreement cannot be reached. Negotiation researchers Roger Fischer and William Ury, of the Harvard Program on Negotiation (PON), are the pioneers of BATNA. They introduced it in their best-selling 1981 book, Getting to Yes: Negotiating Agreement Without Giving In .

BATNA , one of the five principles of negotiation according to Fischer and Ury, focuses on the psychology of negotiators. It does not necessarily guarantee an agreement in your favor, but it prevents the agreement from going against your terms. Having a BATNA before you start negotiating allows you to make greater demands on the other side, as you have a viable alternative available. As a result, you will have an easier time walking away if the negotiations are favoring the other side, making it a valuable tool to have when negotiating for the best deal possible. This guide will help you understand the steps and principles of BATNA.

Why is BATNA Important?

BATNA plays a pivotal role in negotiation and is considered a critical concept for anyone engaged in the negotiation process. Its importance stems from several key reasons:

Risk Mitigation : BATNA serves as a safety net in negotiations. It provides negotiators with a viable alternative in case the current negotiations do not yield a satisfactory agreement. This risk mitigation aspect is crucial because it prevents you from being overly dependent on a single deal and helps you avoid unfavorable outcomes.

Empowerment : Knowing your BATNA empowers you during negotiations. When you are aware of your best alternative, you gain confidence in the negotiation process. This confidence allows you to be more assertive in advocating for your interests and making demands, as you know you have a viable fallback option if the negotiations do not go your way.

Enhanced Decision-Making : BATNA assists in rational decision-making. It allows you to objectively assess whether the proposed agreement is better than your alternative. If the potential agreement doesn't surpass your alternative agreement option, it may be wise to walk away or seek better terms, ensuring that you don't accept a sub-optimal deal.

Reduced Pressure : Negotiations can be stressful, and the fear of reaching no agreement can lead to unfavorable concessions. Having a BATNA alleviates this pressure, as you are less desperate to secure a deal. This reduces the likelihood of making impulsive or unfavorable decisions due to emotional stress.

Negotiation Strategy : Your BATNA informs your negotiation strategy. If your BATNA is strong, you can adopt a more competitive or aggressive stance, knowing that you have an attractive alternative. On the other hand, if it is weak, you may need to be more flexible and accommodating to secure a reasonable deal.

Enhanced Flexibility : BATNA provides flexibility in negotiations. It allows you to explore creative solutions and alternatives without feeling constrained by a single deal. This flexibility can lead to more innovative and mutually beneficial outcomes.

Conflict Resolution : In situations where negotiations break down or become acrimonious, BATNA can serve as a basis for resolving conflicts. Parties can refer back to their alternatives and seek ways to bridge the gap or find common ground by considering each other's BATNAs.

Long-Term Relationship Preservation : Knowing your BATNA can help preserve long-term relationships with negotiation counterparts. When you avoid entering into unfavorable agreements, it reduces the likelihood of resentment or dissatisfaction, potentially preserving a positive working relationship for future interactions.

As you can see, BATNA is critical in any negotiation process because it provides a practical framework for assessing, strategizing, and ultimately achieving more favorable outcomes. It empowers negotiators, reduces risks, and promotes rational decision-making, all of which contribute to more successful and satisfying negotiation outcomes.

The Process of How to Determine Your BATNA

Having a clear picture of your best alternative to a negotiated agreement is a great technique for strengthening your negotiation position. It saves you from accepting unfavorable terms and allows you to push for the best terms possible.

However, finding alternatives to any deal is not a straightforward task. Fisher and Ury gave a simple outline for developing your BATNA:

• Coming up with possible actions as alternatives when no agreement is reached
• Improving the promising options to make them more practical
• Carefully selecting the best option

Using this outline, we have developed the steps below to this process and can help you develop a strong BATNA from scratch.

1. Clearly Define your Purpose

You need to understand what you are trying to get from the negotiation. For example, someone trying to sell a business will have a different negotiating purpose than someone trying to find better pricing on products. So before you set out to negotiate, gather all your stakeholders. Negotiating as a team can help clarify what the stakes are. If you are going to negotiate for a higher salary, make sure you know the terms you are demanding. You must know how credible your demands are for this agreement.

2. Brainstorming

You cannot begin without brainstorming all the possible alternatives you can use during the negotiation. Write down all the alternative agreements you would be willing to accept.; you will come up with more than you initially thought. Once you make a list of all the alternatives, identify the top ones. One mistake people make at this step is having assumptions about the other party. Developing a good BATNA does not involve making theories about the other party.

3. Evaluation

Next comes the evaluation of each alternative. This step can help you check possible mistakes you’ve made in identifying the best options. Do some research about the options you have. The more options you have, the better your understanding of the market will be. Assess each of the options very carefully.

4. Setting the Reservation Point

The meaning of a reservation point is it being the breaking point of the negotiation where a deal will no longer be profitable for you. Great negotiators never reveal their reservation point. Having a viable alternative will let you figure out where your limit should be.

What is a Reservation Point in Negotiation?

The Reservation Point in negotiation is crucial for achieving successful outcomes. It serves as a fundamental marker that shapes negotiation strategies, influences decision-making, and determines whether an agreement is reached. In this context, below are three key reasons why the Reservation Point plays such a pivotal role in negotiation dynamics:

Guidance for Negotiation Strategy

The Reservation Point acts as a negotiation compass, providing clear direction on how to navigate the negotiation process. It helps negotiators decide when to hold their ground when to make concessions, and when to walk away. Without this reference point, negotiations can become aimless and less likely to yield favorable results.

Protection Against Poor Deals

Your Reservation Point serves as a safety net, preventing you from agreeing to terms that are harmful to your interests. It ensures that you do not compromise too much or make impulsive decisions that you might regret later. By establishing your bottom line, you protect yourself from unfavorable agreements.

Negotiating with Confidence

Communicating your Reservation Point to the other party signals that you are a serious and informed negotiator. It enhances your bargaining power and encourages the other side to offer terms that align better with your objectives. This confidence can lead to more favorable outcomes and a higher likelihood of achieving your negotiation goals.

BATNA and ZOPA

Now that you know what a BATNA is, you should be aware of another term that is frequently used along with it. The definition of ZOPA is the Zone of Possible Agreement ; the range or area of a negotiation that is satisfactory to both parties. While each party has its alternative agreements ready in a negotiation, it is not very likely that every negotiation has BATNA and ZOPA.

ZOPA occurs when the reservation point of both parties is equal or very close. In simple terms, it's the area where both parties’ reservation points overlap. For example, if an employee’s demand for a pay raise is equal to or almost the same as what the employer has in mind to offer, that is the ZOPA.

What is ZOPA in Negotiation?

Let's dive a bit deeper into the concept of ZOPA and how it acts as your secret weapon in negotiations. It's all about finding that magical overlap where you and the other party can shake hands and say, "Deal!"

Imagine you're negotiating with someone, and you both want different things. You're like puzzle pieces that don't quite fit together. ZOPA is the space where those puzzle pieces can connect, where you can both get something you want without feeling like you're giving up too much.

Here's how it works:

Defining the Range

ZOPA is like drawing a boundary on a map. It marks the area where the negotiators' desires and limits intersect. On one side, you have your "I absolutely won't go lower than this" line, called your "Reservation Point." On the other side, there's your dream outcome, your "Aspiration Point." This zone is what's in between those points, your potential deal-making territory.

Discovering ZOPA

Negotiations often start with both sides stating their initial wishes. Then, through talks, offers, and maybe some friendly back-and-forth, you start narrowing down the difference between your resolution goals. The more you talk, the clearer the ZOPA becomes.

Why ZOPA Matters

ZOPA is like a treasure map for negotiators. It tells you where to dig for gold, and where to focus your efforts. Knowing the zone of possible agreement helps negotiators aim for the sweet spot in their discussions. It saves time because you're not chasing ideas that are way off the mark, and it increases the chances of finding a deal that works for everyone.

So, when you're in a negotiation, remember ZOPA. It's your agreement zone, the place where you and the other party can meet in the middle and make something good happen. It helps you be more efficient as a negotiator, find common ground, and work toward favorable agreements. It's like having a secret map to success in your negotiations.

Knowing When to Walk Away

Recognizing the right moment to walk away from a negotiation is indeed a powerful skill. It can save you from unfavorable deals, preserve your leverage, and sometimes even improve the chances of reaching a more favorable agreement. Here are several situations where it might be prudent to consider walking away:

• Unacceptable Terms : When the terms of the agreement being proposed are far from what you can accept or would harm your interests significantly, it's a clear sign to consider walking away. Trust your instincts and your assessment of whether the deal aligns with your goals and bottom line.
• Lack of Progress : If the negotiation is stagnant or going in circles with no real progress, it may be time to step back. Continuing a negotiation that's not moving forward can be a waste of time and energy.
• Dishonesty or Untrustworthiness : When you have reason to believe that the other party is being dishonest, unethical, or untrustworthy, it's a strong indicator to walk away. A lack of trust can undermine the foundation of any agreement.
• Better Alternatives : If you have a more attractive alternative elsewhere or a better opportunity on the horizon, walking away from the current negotiation may be wise. Having a strong Plan B gives you the confidence to reject a subpar offer.
• One-Sided Concessions : If you find yourself constantly making concessions while the other party is unwilling to reciprocate, it's a sign that the negotiation is not balanced. Walking away can send a message that you won't accept being taken advantage of.
• Dealbreaker Issues : When there are non-negotiable issues or dealbreakers that cannot be resolved, it may be best to end the negotiation. It's important to prioritize your core principles and values.
• Time Sensitivity : If the negotiation is dragging on, and time is of the essence, you might need to walk away to explore other time-sensitive opportunities. Delaying decisions can sometimes cost you more than abandoning the current negotiation.
• Emotional or Hostile Atmosphere : When the negotiation becomes emotionally charged or hostile, it can hinder productive discussions. Walking away temporarily to cool off and return to the table with a clearer perspective may be beneficial.
• Continuous Power Imbalance : If you're negotiating with a party that holds a significant power advantage and is unwilling to level the playing field, walking away may be your best option. It allows you to seek more equitable terms elsewhere.
• Repeated Violations of Agreements : If the other party repeatedly fails to honor agreements or commitments made during the negotiation process, it may be a sign that further negotiations won't be fruitful. Walking away can protect your interests.

In essence, knowing when to walk away is not a sign of weakness but rather a demonstration of your ability to make strategic decisions and protect your interests. It can lead to better outcomes in future negotiations and help you maintain your integrity in the process.

How to Reveal and Use Your BATNA

Sometimes it can be advantageous for you to reveal your BATNA. If the other party understands that you have a better option, they may be forced to match it or do better to win your business. Remember, the initial terms that a party puts forth in a negotiation are rarely the best they can do. In negotiations, everyone is trying to keep as much of the profit margin as possible for themselves. Your BATNA can be the leverage that you use to show the other side that their deal needs to improve.

Here's how to go about revealing it effectively:

#1 Timing is Key

Consider when to disclose. While you may not want to reveal it right at the outset, there are strategic moments when it can be highly effective. For instance, if you sense that the other party is not willing to budge on their initial offer or if negotiations have reached an impasse, that could be the right time to introduce your BATNA.

#2 Use It as Leverage

Letting the other party know that you have a viable alternative can create a sense of urgency. They may realize that they need to improve their offer to compete with your BATNA. This can give you leverage and encourage them to make concessions to secure your business or agreement.

#3 Frame It Positively

When revealing it, frame it in a positive light. Instead of saying, "I have another offer that's much better," you can say, "I have another opportunity that aligns with my goals, but I believe there's room for us to work together if we can adjust some of the terms."

#4 Be Honest and Credible

Honesty is crucial. If you bluff or exaggerate your BATNA, it can damage your credibility and harm the negotiation process. Provide enough information to make it credible without revealing too much detail.

#5 Highlight Mutual Benefits

Emphasize that a better deal benefits both parties. Instead of making it seem like a threat, position it as an opportunity for a more win-win outcome. Say something like, "I think there's potential for a deal that serves both of our interests if we can find common ground."

#6 Stay Flexible

While your BATNA provides leverage, it's important to remain flexible and open to negotiation. Use it as a tool to improve the terms but be willing to adjust and compromise to reach an agreement that works for both sides.

#7 Prepare for Counteroffers

Anticipate that the other party might respond to counter offers or requests for more details. Be ready to engage in constructive discussions and explore how to bridge the gap between your BATNA and their offer.

#8 Evaluate Their Response

Pay attention to how the other party reacts when you reveal your BATNA. If they are unwilling to improve their offer or if they react negatively, it might indicate that they are not genuinely interested in reaching a fair agreement.

#9 Know Your Limits

While using your BATNA as leverage is powerful, it's essential to know your limits. Don't push too hard to the point where you jeopardize the possibility of reaching an agreement. Keep your priorities in mind and be prepared to walk away if the deal remains unfavorable.

Using your BATNA strategically involves timing, honesty, and effective communication. When done thoughtfully, it can help you improve the terms of a negotiation and create a Both-Win situation for all parties involved.

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What is a BATNA (Best Alternative to a Negotiated Agreement)?

If you’ve ever read a negotiation book or taken a course, you might have heard the acronym BATNA thrown around – or maybe it’s completely new to you!

Either way, BATNA – which stands for Best Alternative to a Negotiated Agreement – is one of the most important components of a successful negotiation. Below we’ll dive into what BATNA really means and how to effectively create one for your next negotiation.

Table of Contents

What is a batna.

Put simply, BATNA is your baseline or your Plan B. It’s what happens if you don’t take the offer you’ve been given. The higher your BATNA, the more comfortable you are pushing for a really significant increase. 

For example - let’s say you absolutely love your current job. The work is interesting, the people are great, and you’re being paid well. However, a recruiter reaches out to you with an interesting opportunity. You start interviewing and eventually get an offer.

As you’re evaluating it, you’re naturally comparing it to your current role. Given that you’re very happy with it, it’s going to take a very tempting offer for you to consider leaving your job. This means your BATNA, or alternative to taking the offer, is high.

However - you might view the new offer quite differently if you hated your current job or weren’t working. This is the power of the BATNA!

Here’s another concrete example – we recently helped a very senior engineer at Google who’d received an external offer.

Because of his stock refreshers and strong performance, the individual had such high compensation at Google that there were very few opportunities that could beat what he was currently making. 

While the initial offer he received was far below what he was currently earning at Google, he used his current compensation at Google to increase it substantially – doing 4 rounds of negotiation to increase the offer by almost $600K in the four-year offer value. 

The engineer would not have negotiated anywhere near as aggressively had his BATNA been lower. Having a high BATNA allows you to more ambitiously advocate for yourself -- both in terms of compensation and also non-monetary benefits like scope, title, etc.

BATNA = Negotiation Leverage

Having a high BATNA gives you leverage – which, in the context of negotiating, we define as “having both something that the job market wants and the ability to walk away before giving it to them.” 

In other words, an employer needs to want you badly enough to give you what you’re negotiating for – and you need to feel like you can ask for it because your alternatives are so compelling!

A compelling BATNA is what gives you leverage in your negotiations with potential or current employers.

While people commonly think having multiple offers is the best way to increase your BATNA – there’s always the risk an offer may not materialize, or that the other offers will be with a company that’s less desirable or too low to use as leverage. Plus, in a tough job market, it’s harder to line up multiple offers at the same time.

At the end of the day, the absolute strongest BATNA is having full confidence in yourself and your financial prospects. This kind of leverage can take many forms, including:

How to Strengthen Your BATNA in Negotiations

• Understand the landscape. Make a list of all of the alternatives you have in lieu of accepting this offer, then order them in terms of attractiveness to you.
• Don’t decrease your leverage. If possible, avoid interviewing at your top choice companies and roles first so you can get some practice under your belt.
• Avoid lifestyle creep. Keep your personal financial situation under check so you can have as much stability as possible.
• Adjust your mindset. In a negotiation, you must be polite but firm. Determine your non-negotiables and stick to them. Going into a negotiation conversation with confidence ( and scripts! ) can greatly improve your chances of getting what you want.  ‍
• Proactively bolster your BATNA. If you’re thinking of making a big career change in the next few months, what can you do now to bolster your BATNA? For example - are there things you can do to make your current job more sustainable so you don’t need to take the first offer you get?

We recently worked with an Engineering Manager who really hated her current role and desperately wanted to leave. We worked with her to have some tough conversations to try to make the work better. One of the biggest things she was able to do was negotiate to be completely remote which makes her work-life balance much better. While she still wants a new role (and is actively interviewing), she no longer feels like she needs to leave as soon as possible, which allows her to interview more selectively.

Understand the Company’s BATNA

Companies also have BATNAs – in other words, what happens to them in the event that you choose to decline an offer. Their BATNA will likely vary by type of role and the business’s needs at the time. 

For example - let's say a startup’s only finance team member quits one month before tax filings are due. Given the timing, they'll be in a lot of trouble if they don't fill the role quickly -- so their BATNA for a new finance lead would probably be quite low. And, their willingness to pay for someone who can join as soon as possible would be quite high.

If you’re given an offer to join the company’s finance team a month before taxes are due, you’ll likely have much more leverage to negotiate than if you joined at another time of the year, or under different circumstances.

In our experience, candidates often don’t do enough due diligence to understand the company’s BATNA. 

To understand this, you need to consider the following questions: 

• How long have they been hiring for this role?
• Why was the role opened up?
• Are there any other candidates at offer stage? How do you compare to them?
• What sort of feedback did you receive throughout the interview process?
• What does the company need immediately or in the long term that you have? Or don’t have?

It’s important to note that it’s not just about how many other people are interviewing – but also about how well-positioned you are for the role.

For example, many recruiters will share with candidates that there are other folks in the recruiting pipeline for the same position to create urgency and make you feel like you need to make a decision quickly. 

Sometimes this is a recruiter tactic, but you can imagine that a company would think about a negotiation differently if you were the only candidate in the pipeline vs. if they also have 3 other top engineers in the interview process. 

When you find out this information - it can be tempting to think you have very little leverage to negotiate. However, by understanding how you’re uniquely positioned for the role, building social capital, or even learning that the company has historically struggled to fill this position, you can still prove your value and have leverage to make an ambitious ask.

You have much greater leverage in a negotiation when the company perceives their BATNA to be weak and/or you perceive your BATNA to be strong. With the right negotiation strategy, you can influence their perception and control yours!

Jordan is a Lead Negotiator at Rora -- and the founder of pay equity startup 81cents, which helps historically-excluded minorities negotiate their pay through data collection and hands-on mentorship.

She's helped over 500 individuals negotiate for higher pay, better titles, and more significant roles and responsibility. Jordan's favorite negotiation was for a product manager who was able to increase her pay by 50%. The pay increase helped the candidate take care of a sick family member and pay for her wedding!

Jordan holds a BA from the University of Pennsylvania and an MBA from the University of California at Berkeley.

Over 1000 individuals have used Rora to negotiate more than $10M in pay increases at companies like Amazon, Google, Meta, hundreds of startups, as well as consulting firms such as Vanguard, Cornerstone, BCG, Bain, and McKinsey. Their work has been featured in Forbes, ABC News, The TODAY Show, and theSkimm.

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