Online Dispute Resolution and Bargaining

Yannick Gabuthy ()

No 304, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: Automated negotiation process seems to be a powerful mechanism to resolve disputes arising from Internet-based transactions. Automated negotiation is an online blind-bidding process in which an automated algorithm evaluates bids from the parties and settles the case if the offers are within a prescribed range.\ Following the arguments of the dispute resolution professionals, the main advantage of this procedure is to promote ''natural'' agreements by restoring the parties' right to negotiate on their own, without the presence of a third party in the shadow of negotiations. Our purpose is to investigate this issue by modelling the automated negotiation process as a two-person bargaining game under incomplete information. A first result states that, given incomplete information, not all mutually beneficial agreements can be attained via the procedure. Furthermore, the settlement rule has a drastic effect on the players' strategies, which induce that the automated negotiation process does not significantly increase the likelihood of a settlement. The ability of the procedure to generate efficiency is only due to the costs imposed on parties if a disagreement occurs, that is the combination of players' risk aversion and uncertainty.

Keywords: economic arbitration; bargaining; double auction; incomplete information; online dispute resolution (search for similar items in EconPapers)
JEL-codes: C78 D80 K41 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2003-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:gat:wpaper:0304

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