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Mediation in Situations of Conflict and Limited Commitment

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  • Roland Strausz

    () (Free University of Berlin, Department of Economics)

  • Kay Mitusch

Abstract

We study the reasons and conditions under which mediation is beneficial when a principal needs information from an agent to implement an action. Assuming a strong form of limited commitment, the principal may employ a mediator who gathers information and makes non--binding proposals. We show that a partial revelation of information is more effective through a mediator than through the agent himself. This implies that mediation is strictly helpful if and only if the likelihood of a conflict of interest is positive but not too high. The value of mediation depends non--monotonically on the degree of conflict. Our insights extend to general models of contracting with imperfect commitment.

Suggested Citation

  • Roland Strausz & Kay Mitusch, "undated". "Mediation in Situations of Conflict and Limited Commitment," Papers 023, Departmental Working Papers.
    • Handle: RePEc:bef:lsbest:023
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    References listed on IDEAS

    as
    1. Roger B. Myerson, 1983. "Bayesian Equilibrium and Incentive-Compatibility: An Introduction," Discussion Papers 548, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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    Citations

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    Cited by:

    1. Doornik, Katherine, 2014. "A rationale for mediation and its optimal use," International Review of Law and Economics, Elsevier, vol. 38(C), pages 1-10.
    2. Goltsman, Maria & Hörner, Johannes & Pavlov, Gregory & Squintani, Francesco, 2009. "Mediation, arbitration and negotiation," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1397-1420, July.
    3. Deffains, Bruno & Demougin, Dominique & Desrieux, Claudine, 2017. "Choosing ADR or litigation," International Review of Law and Economics, Elsevier, vol. 49(C), pages 33-40.
    4. Kohei Kawamura, 2007. "Constrained Communication with Multiple Agents: Anonymity, Equal Treatment, and Public Good Provision," ESE Discussion Papers 166, Edinburgh School of Economics, University of Edinburgh.
    5. Kohei Kawamura, 2006. "Anonymity, Equal Treatment, and Overconfidence: Constraints on Communication May Enhance Information Transmission," Economics Series Working Papers 268, University of Oxford, Department of Economics.
    6. Strausz, Roland, 2012. "Mediated contracts and mechanism design," Journal of Economic Theory, Elsevier, vol. 147(3), pages 1280-1290.
    7. Bester, Helmut & Strausz, Roland, 2007. "Contracting with imperfect commitment and noisy communication," Journal of Economic Theory, Elsevier, vol. 136(1), pages 236-259, September.
    8. Krahmer, Daniel, 2006. "Message-contingent delegation," Journal of Economic Behavior & Organization, Elsevier, vol. 60(4), pages 490-506, August.
    9. Goltsman, Maria & Pavlov, Gregory, 2011. "How to talk to multiple audiences," Games and Economic Behavior, Elsevier, vol. 72(1), pages 100-122, May.
    10. Maria Goltsman, 2011. "Optimal information transmission in a holdup problem," RAND Journal of Economics, RAND Corporation, vol. 42(3), pages 495-526, September.
    11. Rossella Argenziano & Sergei Severinov & Francesco Squintani, 2016. "Strategic Information Acquisition and Transmission," American Economic Journal: Microeconomics, American Economic Association, vol. 8(3), pages 119-155, August.
    12. Berthomé, Guy-El-Karim & Thomas, Alban, 2017. "A Context-based Procedure for Assessing Participatory Schemes in Environmental Planning," Ecological Economics, Elsevier, vol. 132(C), pages 113-123.
    13. Ivanov, Maxim, 2014. "Beneficial mediated communication in cheap talk," Journal of Mathematical Economics, Elsevier, vol. 55(C), pages 129-135.
    14. Pinghan Liang, 2010. "Transfer of Authority within Hierarchy," Levine's Working Paper Archive 661465000000000139, David K. Levine.
    15. Mitusch, Kay, 2006. "Non-commitment in performance evaluation and the problem of information distortions," Journal of Economic Behavior & Organization, Elsevier, vol. 60(4), pages 507-525, August.

    More about this item

    Keywords

    Mediation; Negotiation; Limited Commitment; Revelation Principle;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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