BATNA is an acronym which stands for "Best Alternative to Negotiated Agreement." When two or more parties engage in a negotiation, there are three general points that could be considered. The first point is the best case negotiated agreement. This would be a situation where Party A obtains everything it wants without any cost. Outside of a truly unique situation, this likely to be impossible to attain. The second point is the worst case negotiated agreement. This would be a situation where Party A obtains nothing they want but has to cover substantial costs. This is also likely to be impossible to attain outside of a truly unique situation. The final point would be the BATNA. This is the situation where Party A decides to walk away from a negotiation with no agreement.
BATNA is an important concept because negotiators, especially less experienced negotiators, can push themselves to a point where they believe it is necessary to take a negotiated deal. By remembering the BATNA, negotiators can have a good baseline for negotiations as well as a hard point at which it is advisable to merely walk away with no deal.
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