Strategy-Proof Multi-Issue Mediation: An Application to Online Dispute Resolution

Mediation (assisted negotiation) is the preferred alternative dispute resolution approach that has given rise to a multibillion-dollar industry worldwide. Online dispute resolution (ODR) providers rely heavily on mechanized e-negotiation systems. Inspired by their structured negotiation systems, we...

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Bibliographic Details
Published in:Management science 2024-04
Main Authors: Kesten, Onur, Özyurt, Selçuk
Format: Article
Language:English
Subjects:
e-negotiation systems
economics: game theory and bargaining theory
mechanism design
mediation
online dispute resolution
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Summary:Mediation (assisted negotiation) is the preferred alternative dispute resolution approach that has given rise to a multibillion-dollar industry worldwide. Online dispute resolution (ODR) providers rely heavily on mechanized e-negotiation systems. Inspired by their structured negotiation systems, we follow a market design approach and develop a tractable framework in search of strategy-proof, efficient, and individually rational mediation mechanisms. We characterize the full family of such mechanisms and the domains of preferences in which they exist. A necessary and sufficient condition for the existence of such protocols is the so-called quid pro quo property; a weak condition that formulates preferences for compromise solutions. This paper was accepted by Axel Ockenfels, behavioral economics and decision analysis. Funding: S. Özyurt is grateful for the support he received from the Social Sciences and Humanities Research Council and the European Commission [Grant 659780]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2023.00383 .
ISSN:0025-1909
1526-5501
DOI:10.1287/mnsc.2023.00383