Module 2

Valuing your alternative: expected value, cost, delay and risk

The most important number in a negotiation is the one that nobody else sees: what happens if you walk away. If your alternative is worth 150,000 to you today, any deal below that is a mistake, and any deal above it is a gain. If you have not worked the number out, you will either accept too little because the deal in front of you feels like safety, or hold out too long because you have overrated your chances. Valuing an alternative is not difficult. You list what could happen, say how likely each outcome is and what it is worth, take the average, subtract what it would cost, allow for the time it would take and for the risk you would bear. The hard part is honesty: the probabilities are your own judgement, and people are reliably too optimistic about their own cases. This module shows the steps and the traps, and introduces the idea of improving your alternative before you sit down, since that is often the best use of preparation time. The BATNA Valuer does the arithmetic with invented figures, and shows how far the answer moves if your judgement is a little off.

General education on using data in negotiation, with invented companies, people, disputes and figures. It states common practice in simplified form and does not describe any one country's law or professional rules, which differ and change; rules on candour, misrepresentation, confidentiality and settlement in particular vary. The tools organise your own estimates and cannot predict the result of any real negotiation. It is not legal advice, and it does not replace advice from a qualified lawyer on a real matter.