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Mediation in Situations of Conflict and Limited Commitment

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  • Kay Mitusch
  • Roland Strausz

Abstract

We study the reasons and conditions under which mediation is beneficial when a principal needs information from an agent to implement an action. Assuming a strong form of limited commitment, the principal may employ a mediator who gathers information and makes nonbinding proposals. We show that a partial revelation of information is more effective through a mediator than through the agent himself. This implies that mediation is strictly helpful if and only if the likelihood of a conflict of interest is positive but not too high. The value of mediation depends nonmonotonically on the degree of conflict. Our insights extend to general models of contracting with imperfect commitment. Copyright 2005, Oxford University Press.

Suggested Citation

  • Kay Mitusch & Roland Strausz, 2005. "Mediation in Situations of Conflict and Limited Commitment," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 21(2), pages 467-500, October.
    • Handle: RePEc:oup:jleorg:v:21:y:2005:i:2:p:467-500
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    Cited by:

    1. Goltsman, Maria & Hörner, Johannes & Pavlov, Gregory & Squintani, Francesco, 2009. "Mediation, arbitration and negotiation," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1397-1420, July.
    2. Deffains, Bruno & Demougin, Dominique & Desrieux, Claudine, 2017. "Choosing ADR or litigation," International Review of Law and Economics, Elsevier, vol. 49(C), pages 33-40.
    3. Strausz, Roland, 2012. "Mediated contracts and mechanism design," Journal of Economic Theory, Elsevier, vol. 147(3), pages 1280-1290.
    4. Krahmer, Daniel, 2006. "Message-contingent delegation," Journal of Economic Behavior & Organization, Elsevier, vol. 60(4), pages 490-506, August.
    5. Rossella Argenziano & Sergei Severinov & Francesco Squintani, 2016. "Strategic Information Acquisition and Transmission," American Economic Journal: Microeconomics, American Economic Association, vol. 8(3), pages 119-155, August.
    6. Berthomé, Guy-El-Karim & Thomas, Alban, 2017. "A Context-based Procedure for Assessing Participatory Schemes in Environmental Planning," Ecological Economics, Elsevier, vol. 132(C), pages 113-123.
    7. Bester, Helmut & Strausz, Roland, 2007. "Contracting with imperfect commitment and noisy communication," Journal of Economic Theory, Elsevier, vol. 136(1), pages 236-259, September.
    8. Ivanov, Maxim, 2014. "Beneficial mediated communication in cheap talk," Journal of Mathematical Economics, Elsevier, vol. 55(C), pages 129-135.
    9. Mitusch, Kay, 2006. "Non-commitment in performance evaluation and the problem of information distortions," Journal of Economic Behavior & Organization, Elsevier, vol. 60(4), pages 507-525, August.
    10. Goltsman, Maria & Pavlov, Gregory, 2011. "How to talk to multiple audiences," Games and Economic Behavior, Elsevier, vol. 72(1), pages 100-122, May.
    11. Dominic Rohner, 2018. "Success Factors for Peace Treaties: A Review of Theory and Evidence," Cahiers de Recherches Economiques du Département d'économie 18.08, Université de Lausanne, Faculté des HEC, Département d’économie.
    12. Doornik, Katherine, 2014. "A rationale for mediation and its optimal use," International Review of Law and Economics, Elsevier, vol. 38(C), pages 1-10.
    13. Kohei Kawamura, 2007. "Constrained Communication with Multiple Agents: Anonymity, Equal Treatment, and Public Good Provision," Edinburgh School of Economics Discussion Paper Series 166, Edinburgh School of Economics, University of Edinburgh.
    14. Kohei Kawamura, 2006. "Anonymity, Equal Treatment, and Overconfidence: Constraints on Communication May Enhance Information Transmission," Economics Series Working Papers 268, University of Oxford, Department of Economics.
    15. Li Ming, 2010. "Advice from Multiple Experts: A Comparison of Simultaneous, Sequential, and Hierarchical Communication," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-24, April.
    16. Blume, Andreas & Lai, Ernest K. & Lim, Wooyoung, 2019. "Eliciting private information with noise: The case of randomized response," Games and Economic Behavior, Elsevier, vol. 113(C), pages 356-380.
    17. Maria Goltsman, 2011. "Optimal information transmission in a holdup problem," RAND Journal of Economics, RAND Corporation, vol. 42(3), pages 495-526, September.
    18. Pinghan Liang, 2010. "Transfer of Authority within Hierarchy," Levine's Working Paper Archive 661465000000000139, David K. Levine.
    19. Christmann Robin, 2015. "Tipping the Scales – Settlement, Appeal and the Relevance of Judicial Ambition," Review of Law & Economics, De Gruyter, vol. 11(2), pages 171-207, July.

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    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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