In order to be successful in your next negotiation, you are going to have to go in prepared. What this means is that you need to have taken the time to get ready to negotiate. We all understand that this means that we need to take the time to understand what our best alternative to a negotiated agreement (BATNA) is, right? We need to make sure that if during the negotiations things start to go sideways, we know what our alternatives to reaching a deal with the other side are. However, if the thinking that showing up with one BATNA is a good thing, then perhaps we should show up with multiple BATNAs?
We negotiators are often taught that the more alternatives we have going into a negotiation, the more fortunate we are. Based on this idea, then if it’s good to have one strong best alternative to a negotiated agreement, or BATNA, then it’s probably better to have many BATNAs, right? Although it would be natural to think this, if you do this then you just might not get the results that you want out of your next negotiation.
A study took a look at what happened in a series of experiments when the researchers gave participants either one alternative to their current negotiation or several. In all of the studies, those who had more than one alternative perceived the bargaining zone to be less advantageous to them and made less-ambitious first offers than those who had only one alternative. In one of the experiments, where participants had to sell a dishwasher to another participant, the less-ambitious first offers of those with multiple BATNAs resulted in worse outcomes as compared to those with just one alternative. These results were found regardless of whether the average price of the multiple alternatives was higher (e.g., $185, $180, and $175) or lower (e.g., $175, $170, and $165) than the price in the single-alternative condition ($175).
What’s Wrong With Multiple BATNAs?
During the study, the researchers found that there was evidence that a range of offers serves as a more powerful anchor than a single offer in affecting our perceptions of what the bargaining zone is. An example of this is if you suppose that a seller is trying to negotiate the price of a dishwasher and has already secured an alternative offer of $175. This seller is likely to construe the offer of $175 as more attractive (and less likely to bargain harder) if they also have two other offers of $170 and $165 than if they have only the one offer of $175. In effect, alternatives that are worse than one’s BATNA, which should be irrelevant to our decision-making, end up anchoring our expectations and first offers downward.
You need to keep in mind that there are limits to this effect: Researchers have found that multiple alternatives reduce first offers only when negotiators thought about their first offers in purely numeric ways (e.g., “Should I ask for $190 or $185?”), rather than more descriptively (e.g., “Which should I make: a moderate or high first offer?”). These lead to worse outcomes only when negotiators made the first offer themselves rather than responding to a counterpart’s first offer.
What All Of This Means For You
As negotiators, we have an obligation to make sure that we are prepared when we enter into our next negotiation. This means that we need to have done our homework and we have a good understanding of what our BATNA is. Once we know this, we still have a decision to make: should we go in with one BATNA or multiple BATNAs?
The results of research provide us with some answers to these questions. The research seems to show that if we have multiple BATNAs then we’ll view our bargaining zone to be less advantageous. The end result of this is that during the negotiation we will make less-ambitious first offers than negotiators who have only one alternative. You need to not take these results as permission to stop looking for strong alternatives after identifying one solid BATNA, as this could lead you to end the search too early. Instead, after identifying multiple alternative BATNAs, do your best to focus on the one you value most and try to put the others out of your mind.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™
Question For You: Can you think of a situation where having multiple BATNAs would actually put you in a stronger position?
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What We’ll Be Talking About Next Time
When we know that we are going to be entering a negotiation, we need to get prepared. What this means is that we need to make sure that we allocate the time that will be required in order to allow us to make sure that we study all of the things that we believe will be going into this negotiation. The final outcome of the negotiation may be based on how good of a job we do preparing for it. This means that knowing how to prepare for a negotiation is a key skill that every negotiator has to master.