Does it Take Three to Make Two Happy? An Experimental Study on Bargaining with Mediation

Abstract

Mediation is a conflict resolution method in which a third neutral party provides assistance to the conflict parties. The process of mediation, as well as any solution to the conflict arising from it, is implemented only by the consent of all conflict parties. It is the role of a mediator to stimulate communication that leads to mutual understanding of the feasible conflict outcomes, i.e., to complete information on solution consequences among the parties of the conflict. This information is used by the parties of the conflict to evaluate their own, as well as the others consequences of a proposed solution to the conflict. However, it is not clear whether the information itself, or the way it was obtained (by voluntary participation in a process in which it was collected), leads to a conflict resolution. This paper concentrates on the bargaining behavior in a conflict, abstracting from the mediators methods and techniques. We design an experiment where two-person conflicts are resolved in an unstructured bargaining and study whether the way of obtaining information on the relative payoffs influences the conflict resolution process. We also study the demand for such information by individuals with various types of social preferences. This allows us to address the role of self-selection in the mediation process.

Keywords: Bargaining, information, communication, behavioural science

JEL Classification: D74, C92, K49