BATNAs are critical to negotiation because you cannot make a wise decision about whether to accept a negotiated agreement unless you know what your alternatives are. If you are offered a used car for $7,500, but there's an even better one at another dealer for $6,500--the $6,500 car is your BATNA. Another term for the same thing is your "walk away point." If the seller doesn't drop her price below $6,500, you will WALK AWAY and buy the other car. Your BATNA "is the only standard which can protect you both from accepting terms that are too unfavorable and from rejecting terms it would be in your interest to accept."[2] In the simplest terms, if the proposed agreement is better than your BATNA, then you should accept it. If the agreement is not better than your BATNA, then you should reopen negotiations. If you cannot improve the agreement, then you should at least consider withdrawing from the negotiations and pursuing your alternative (though the relational costs of doing that must be considered as well).
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