Nonbinding Suggestions and Dispute Rates: Uncertainty, Focal Points, and their Effects on Bargaining Outcomes (ICPSR 25323)

Version Date: Sep 27, 2010

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Principal Investigator(s):
David Dickinson, Appalachian State University; Lynn Hunnicutt

https://doi.org/10.3886/ICPSR25323.v1

Version V1

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Summary

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.

Citation

Dickinson, David, and Hunnicutt, Lynn. Nonbinding Suggestions and Dispute Rates: Uncertainty, Focal Points, and their Effects on Bargaining Outcomes. Inter-university Consortium for Political and Social Research [distributor], 2010-09-27. https://doi.org/10.3886/ICPSR25323.v1

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Funding

National Science Foundation (0316414)

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Distributor(s)

Inter-university Consortium for Political and Social Research
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Time Period(s)

2000-09 -- 2003-10

Data Collection Notes

  1. The zipped package contains PDF documents and Microsoft Excel files, which includes the data, tables, and figures used in the publication.

  2. 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.

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Original Release Date

2010-09-27

Version History

2018-02-15 The citation of this study may have changed due to the new version control system that has been implemented. The previous citation was:
  • 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
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Notes

  • These data are flagged as replication datasets and are distributed exactly as they arrived from the data depositor. ICPSR has not checked or processed this material. Users should consult the investigator(s) if further information is desired.

  • The public-use data files in this collection are available for access by the general public. Access does not require affiliation with an ICPSR member institution.