In a negotiation, how does knowing your best option if no deal is made (your BATNA) help you decide the lowest point you will accept?

Knowing your Best Alternative To a Negotiated Agreement, or BATNA, is crucial because it directly establishes your reservation point, which is the lowest acceptable value or condition you will agree to in a negotiation before walking away. Your BATNA represents the most advantageous course of action you can take if the current negotiation does not result in a satisfactory agreement with the other party. It is not merely the absence of a deal, but a specific, viable option that you can pursue independently. By thoroughly identifying and evaluating this best alternative, you gain a clear, objective standard against which to measure any proposed deal from your current negotiating partner. If a potential agreement offers less value or worse terms than your BATNA, then accepting that agreement would be irrational, as you would be better off pursuing your alternative. Therefore, your reservation point is set at a value equivalent to, or just slightly above, the value of your BATNA. For example, if you are selling an item and your BATNA is an existing offer from another buyer for $500, then your lowest acceptable selling price to the current negotiator would be $500. Any offer below that amount means you would be better off pursuing your BATNA. This objective benchmark empowers you to resist pressure to accept an unfavorable deal, provides confidence in knowing precisely when to walk away, and ensures you do not agree to terms worse than what you could achieve on your own.