BATNA as a Double-Edged Sword: The Hidden Cost of a Good Alternative

Abstract: We investigate the influence of the strength of one's BATNA (Best Alternative to a Negotiated Agreement) and the perception thereof on the willingness to negotiate and the negotiation outcome. To this end, we conducted an experiment with 270 participants across two studies: in one, participants received reference information about their BATNA, while in the other, they were given no additional information about the quality of their alternative. Our results reveal that participants who were aware of their strong BATNA were less willing to negotiate than all the other groups. This reluctance to negotiate led to worse outcomes for participants with a strong BATNA who were aware of its strength but decided not to negotiate. Conversely, participants with a strong BATNA profited from negotiating but got a lower portion of the negotiation pie than participants with a weak BATNA. Overall, our findings highlight the critical role of the BATNA and the BATNA perception, revealing its paradoxical influence: while it reduces the likelihood of engaging in negotiations, it also enables successful outcomes for those who choose to negotiate, having a particularly positive impact on those with weak alternatives.

Keywords: willingness to negotiate, best alternative to a negotiated agreement (BATNA), BATNA perception strength, negotiation performance.