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Mediation in Situations of Conflict

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  • Kay Mitusch

    (Free University of Berlin)

  • Roland Strausz

    (Free University of Berlin)

Abstract

We study the effectiveness of mediators in situations of conflict. In a game of cheap talk a principal may employ a mediator whose task is to gather information and make non--binding proposals. We show that mediators facilitate information transmission and are helpful if and only if the likelihood of a conflict of interest is strictly positive but not too high. Mediation increases the amount of information that can be induced in equilibrium and is helpful when full information revelation is not feasible. The insights of this paper extend to general models of mechanism design with imperfect commitment of the contract designer.

Suggested Citation

  • Kay Mitusch & Roland Strausz, 2000. "Mediation in Situations of Conflict," Econometric Society World Congress 2000 Contributed Papers 0361, Econometric Society.
    • Handle: RePEc:ecm:wc2000:0361
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    References listed on IDEAS

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    1. Forges, Francoise, 1988. "Can sunspots replace a mediator?," Journal of Mathematical Economics, Elsevier, vol. 17(4), pages 347-368, September.
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    7. Myerson, Roger B, 1986. "Multistage Games with Communication," Econometrica, Econometric Society, vol. 54(2), pages 323-358, March.
    8. Françoise Forges, 1990. "Equilibria with Communication in a Job Market Example," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(2), pages 375-398.
    9. Kay Mitusch & Roland Strausz, "undated". "Mediators and Mechanism Design: Why Firms Hire Consultants," Papers 005, Departmental Working Papers.
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    12. Helmut Bester & Roland Strausz, "undated". "Imperfect Commitment and the Revelation Principle," Papers 004, Departmental Working Papers.
    13. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, April.
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    Cited by:

    1. Krähmer, Daniel, 2002. "Delegation versus authority [Delegation versus Autorität]," Discussion Papers, Research Unit: Market Processes and Governance FS IV 02-26, WZB Berlin Social Science Center.

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