We are all taught that before entering into any negotiation, we should give some thought to what our best alternative is if we do not settle (that is, our Best Alternative to a Negotiated Agreement or BATNA.) And along these lines, we have learned that if we have a really strong alternative to a potential settlement, we will be pickier about accepting just any settlement. That is, we will set higher goals and be more ambitious in our offers and counteroffers. (See, infra.)
But seldom do we reflect on the fact that a bad or weak BATNA can literally anchor us to a poor settlement. In their April 7, 2022 PON blog post entitled “When a Little Power is a Dangerous Thing”, the staff discusses a study by researchers Michael Schaerer and Roderick I. Swaab of INSEAD and Adam D. Galinsky of the Columbia Business School published in the journal Psychological Science showing that a weak BATNA can lead to poor negotiation results. A weak BATNA acts as a low anchor leading to a less than desirable result. The researchers conducted an experiment in which a pair of students acted as a buyer and as a seller of a Starbucks mug which the students knew to be valued at 8.90 euros:
Before meeting their negotiating partners, students playing the role of seller received a phone call, purportedly from another potential buyer. Some of the sellers received a call from a buyer who made a low offer of 1.50 euros for the mug; others received a call from a buyer who declined to make any offer for the mug. Thus, some of the sellers had a weak BATNA, and some had no BATNA at all. In their subsequent negotiations, the sellers were instructed to make the first offer and to negotiate with their counterpart until they reached agreement on the sale price of the mug.
The results? After their phone calls (and before their face-to-face negotiations), negotiators who had no BATNA reported feeling less powerful as compared with those who had a weak BATNA. Nevertheless, those with no power set significantly higher opening selling prices for the mug than did those with a weak alternative, and those with no power went on to achieve better outcomes as a result.
The anchoring effect of a clear, weak alternative trumped negotiators’ sense of power, the team found. (Id.)
From this study, the researchers concluded that having a BATNA is not necessarily and always a good thing. Rather, a “… weak BATNA may lead negotiators to irrationally aim lower than they would if they had no alternatives at all. “(Id.) In sum, when entering into a negotiation, it may be better to have no BATNA at all than to have a weak one. Having nothing to lose, you may aim a lot higher in your negotiating stance.
However, the blog post does caution that we should not abandon any and all searches for our BATNAs. One never knows- it may just come in handy when we need it the most.
… Just something to think about.