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Does resorting to online dispute resolution promote agreements? Experimental evidence

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Author Info
Gabuthy, Yannick
Jacquemet, Nicolas
Marchand, Nadège

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Abstract

This paper presents an experiment performed to test the properties of an innovative bargaining mechanism (called automated negotiation) used to resolve disputes arising from Internet-based transactions. The main result shows that the settlement rule tends to chill bargaining as it creates incentives for individuals to misrepresent their true valuations, which implies that automated negotiation is not able to promote agreements. However, this perverse effect depends strongly on the conflict situation. When the threat that a disagreement occurs is more credible, the strategic effect is reduced since defendants are more interested in maximizing the efficiency of a settlement than their own expected profit. The implications of these results are then used to discuss the potential role of public regulation and reputation mechanisms in Cyberspace.

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Publisher Info
Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 52 (2008)
Issue (Month): 2 (February)
Pages: 259-282
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Handle: RePEc:eee:eecrev:v:52:y:2008:i:2:p:259-282

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    Other versions:
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  12. Farber, Henry S & Bazerman, Max H, 1986. "The General Basis of Arbitrator Behavior: An Empirical Analysis of Conventional and Final-Offer Arbitration," Econometrica, Econometric Society, vol. 54(6), pages 1503-28, November. [Downloadable!] (restricted)
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