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Does Fact-Finding Promote Settlement? Theory and a Test

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  • David L. Dickinson
  • Lynn Hunnicutt

Abstract

Nonbinding recommendations, such as provided by fact-finders, are shown to significantly increase voluntary settlements in bargaining. Theoretically, it is unclear whether recommendations will increase settlement rates. A recommendation may reduce outcome uncertainty, thereby "chilling" bargaining and increasing dispute rates. On the other hand, a recommendation may give the parties a focal point around which an agreement is made. Which of these effects dominates is a question that we consider using theory and data from controlled bargaining experiments. The data show the dominance of a focal point effect for suggestions, highlighting their potential role in improving dispute settlement procedures.(JEL C78, C92, J52) Copyright 2005, Oxford University Press.

Suggested Citation

  • David L. Dickinson & Lynn Hunnicutt, 2005. "Does Fact-Finding Promote Settlement? Theory and a Test," Economic Inquiry, Western Economic Association International, vol. 43(2), pages 401-416, April.
  • Handle: RePEc:oup:ecinqu:v:43:y:2005:i:2:p:401-416
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    Cited by:

    1. Deck, Cary A. & Farmer, Amy, 2009. "Strategic bidding and investments in final offer arbitration: Theory and experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 70(1-2), pages 361-373, May.
    2. David Dickinson & Lynn Hunnicutt, 2005. "Nonbinding Suggestions: The Relative Effects of Focal Points versus Uncertainty Reduction on Bargaining Outcomes," Working Papers 05-13, Department of Economics, Appalachian State University.
    3. David Dickinson & Lynn Hunnicutt, 2010. "Nonbinding recommendations: the relative effects of focal points versus uncertainty reduction on bargaining outcomes," Theory and Decision, Springer, vol. 69(4), pages 615-634, October.

    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation

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