Updated February 2013
BATNA is a term invented by Roger Fisher and William Ury in their book Getting to Yes (New York: Penguin. 1981, Second edition with Bruce Patton, 1991). BATNA stands for "best alternative to a negotiated agreement." This is not your ideal solution — the best you can hope for — but rather the best you can do if the other person (or side) refuses to work with you at all. The key phrase, therefore is not just "best alternative," but "ALTERNATIVE TO a negotiated agreement." As I tell my students, it is the best you can do if the other side tells you to "go jump in a lake!"
This concept is important to anyone who is involved in a negotiation or a mediation. It is also important to mediators, who need to understand what each party's BATNA is before they can understand what is and what is not an acceptable offer.
Fisher and Ury assert that no one should enter into a negotiation without knowing what their alternatives are. They need to know what they can get if they walk out of the negotiation and pursue their interests in another way. If the negotiated agreement they work out is better than their best alternative, they should take it. If they cannot agree to an outcome that is at least as good as, if not better than, their BATNA, they should pursue their BATNA. It also helps to know the other sides' BATNA. If you want to reach an agreement, you must make an offer that meets these alternatives. If you don't, they are likely to walk away. If there are many parties and many issues, this can become especially difficult.
The simplest example of the importance of BATNAs is in the negotiations that take place over the purchase of a car. People buying a new car usually compare several makes and models, and once they find one they like, they may check to see what price is offered by several dealers. They find the dealer who is offering the lowest price, and then they negotiate with him or her. If the final offer is lower than that which any other dealer is offering for a comparable car, the buyers should buy the car. But if the lowest offer is not as good as the price of a comparable car elsewhere, the buyers should seek out the dealer with the better price.
BATNAs are also important in complex negotiations between businesses or even nations. Peace accords often break down because one or more sides decide that the outcome promised in the settlement is worse than that which they think they can get if they continue the war. Even if this is not true (if they cannot win), it is the perception, more than the reality, which is likely to determine behavior. Therefore if a nation (or an organization or a person) simply thinks that they can get 100% of what they want (or close to it) if they keep fighting, then they will refuse to negotiate or to accept an negotiated agreement, even IF an outside, neutral observer would realize that the agreement is better than what they are likely to win if they continue the fight.
People, groups, or even nation states involved in negotiations need to make a careful assessment of all of their alternatives and the likely costs and benefits of each (measuring costs and benefits in non-monetary as well as monetary terms). Only then will they be able to tell which alternative is the best.