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Nonbinding Suggestions and Dispute Rates: Uncertainty, Focal Points, and their Effects on Bargaining Outcomes (ICPSR 25323)
This paper focuses on the effects of nonbinding recommendations on bargaining outcomes. Recommendations are theorized to have two effects: they can create a focal point for final bargaining positions, and they can decrease outcome uncertainty should dispute persist. While the focal point effect may help lower dispute rates, the uncertainty reduction effect is predicted to do the opposite for risk-averse bargainers. Which of these effects dominates is of critical importance in the optimal design of alternative dispute resolution (ADR) procedures, which are becoming increasingly utilized to help resolve disputes in a variety of settings. We theoretically examine the effects of recommendations on the bargaining contract zone. Our theoretical framework, which allows bargainers' final positions to influence a binding outcome should negotiations fail, provides for a more stringent test of focal points than previously considered. We also present data from controlled laboratory bargaining experiments that are consistent with our model of recommendation effects. Recommendations are empirically shown to influence final bargaining positions and negotiated settlement values. Furthermore, dispute rates are significantly lower when one includes recommendations, even where the recommendation is completely ignored in final-stage arbitration. This highlights a potentially significant role for the use of nonbinding procedures, such as mediation, as a preliminary stage in developing more efficient ADR procedures.
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Dickinson, David, and Lynn Hunnicutt. Nonbinding Suggestions and Dispute Rates: Uncertainty, Focal Points, and their Effects on Bargaining Outcomes. ICPSR25323-v1. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2010-09-27. http://doi.org/10.3886/ICPSR25323.v1
Persistent URL: http://doi.org/10.3886/ICPSR25323.v1
This study was funded by:
- National Science Foundation (0316414)
Scope of Study
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These data are part of ICPSR's Publication-Related Archive and are distributed exactly as they arrived from the data depositor. ICPSR has not checked or processed this material. Users should consult the investigators if further information is desired.
Original ICPSR Release: 2010-09-27
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