Friday, April 11, 2014

What has Fairness got to do with Mediation?

For those readers that enjoy a bit of game theory, herescaleofjustice is a lesson I learned last week at the ABA Dispute Resolution Conference.  It turns out that human beings have a keen sense of fairness and will reject an offer they think is inherently unfair, even if it is of benefit to them.  The good news is that we are all human, and so behavioral economists predict that most of us will not be ultra-greedy as we expect that our human negotiating counterparts will reject an inherently unfair offer.  Some call this "predictable irrationality".
Here is how the "ultimatum game" is played.  One person is the "proposer" and is handed $100.00 (in singles).  He is asked to offer some amount to the responder.  If the responder accepts, they have a deal.  If the responder rejects, neither proposer nor responder get to keep any of the money.  Typically, 50% of the responders would reject anything less than $30 and about 50% of the time, the proposer would offer about $50.  On the other hand, if it was a computerized offer, the responder would, on average, accept $15, because we don't expect a computer to be fair.  But even monkeys exhibit similar behaviors where, for example, they observe another monkey getting a better treat than theirs.
Mediators can, it seems, harness that inherent "fairness" principle to begin a negotiation that is driven by the parties sense of fairness.  This will trigger a natural reciprocity and bring out the best in the negotiating parties at the outset.