Jabba and the bounty hunter (who’s really Princess Leia) are bargaining over Chewbacca. This shows how two parties may bargain and negotiate by going back and forth and by placing values they are willing to accept in the transaction. These values are achieved by each party determining their Best Alternative To a Negotiated Agreement (BATNA), which is the amount of value a party receives if no agreement is made. This value is the lowest amount one would be willing to accept. We also note that, unlike most markets, we see coercion and violence being used as a tactic here due to the lack of institutions, such as courts, that can step in to settle this dispute. Institutions are the rules placed on a society that keep parties’ behaviors in balance. Learn more about Bargaining, Negotiations, Institutions, and Best Alternative to a Negotiated Agreement (BATNA) in this clip!