Does Fact-Finding Promote Settlement? Theory and a Test

David Lewis Dickinson and Lynn Hunnicutt

Economic Inquiry, 2005, vol. 43, issue 2, pages 401-416

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.

JEL-codes: C78 C92 J52 (search for similar items in EconPapers)
Date: 2005
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Working Paper: DOES FACT-FINDING PROMOTE SETTLEMENT? THEORY AND A TEST (2002)
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