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.

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BATNA Examples in Negotiation

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:

  1. 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.
  2. 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. 
  3. 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.
  4. 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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