Mediation · A Mechanism Design and Cheap Talk Approach to Mediation

A Mechanism Design and Cheap Talk Approach to Mediation

"Mediation is an alternative dispute resolution method, which has gained increasing popularity over the last few decades and become a multi-billion-dollar industry. When two parties are in a disagreement, either party can take the case to a conventional court of law and have a judicial authority make a binding final decision. Alternatively, the disputing parties can seek assistance from an experienced, neutral third party, i.e., a mediator, who facilitates the negotiation and help them voluntarily reach an agreement short of litigation. Employment disputes, patent/copyright violations, construction disputes, and family disputes are some of the most common mediated disputes. The rising popularity of mediation can be explained by the increasing workload of courts, by the fact that mediation is less costly than litigation, and by the desire of some control over the final decision. This project aimed, by using a mechanism design and cheap talk approach, to build a theoretical framework that is rich enough to determine optimal strategies, techniques, and methods that the mediators shall use for the efficient resolution of disputes. The primary purpose is to formally define the mediation problem and build a framework that is simple enough to study both single- and multi-issue mediation problems. Many traditional ""cardinal"" settings of bargaining and mechanism design have emphasized the tension between efficiency and truthful incentives. For this purpose Dr Ozyurt has adopted and further explored an ""ordinal"" mechanism design approach and characterized the full class of strategy-proof, efficient, and individually rational mediation rules."

Data: CORDIS, © European Union