Conciliation, Social Preferences, and Pre-Trial Settlement: A Laboratory Experiment

We experimentally study whether conciliation, a dispute resolution mechanism where a neutral third party makes non-binding suggestions of resolution to the parties, can improve bargaining efficiency. In conciliation, a neutral third party collaborates with the parties by suggesting resolutions to promote agreements. Unlike delegation or arbitration, conciliation fully preserves the autonomy of the parties. Unlike mediation, the conciliator cannot filter information. Whether conciliation can improve bargaining efficiency is an open question. In our laboratory experiment, two “litigants” bargain over the split of a loss in an unstructured protocol. In case of failure, a random split is implemented. In some conditions, a third party, the conciliator takes part in the bargaining by submitting non-binding suggestions to the litigants. We find that, on average, conciliation does not reduce the likelihood of failure, and does not affect the splits that are agreed upon by litigants. However, conciliation reduces bargaining delays: the time and the number of offers necessary to converge to an agreement are significantly reduced in the presence of a conciliator. In addition, conciliation has a heterogeneous effect: while its average effect is null, for bargaining pairs composed of selfish litigants, it results in more equal agreements. The social preferences of the conciliator matter too, both for the likelihood and nature of agreements.