Mediation in Situations of Conflict and Limited Commitment

Kay Mitusch and Roland Strausz ()
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Kay Mitusch: Free University Berlin, Department of Economics, Boltzmannstr. 20, D-14195 Berlin, Germany

No 24, Discussion Papers from SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

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 rev-elation 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.

Keywords: Contracting; Non-Commitment; Revelation Principle (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec
Date: Written
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Related works:
Working Paper: Mediation in Situations of Conflict and Limited Commitment
Journal Article: Mediation in Situations of Conflict and Limited Commitment (2005)
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