Cognitive bias in mediation


Something I have been interested in for a long time is the psychology behind disputes. The scenario that springs to mind is a boundary dispute where the issue for legal advisors and mediators (which we have all encountered) seems to be:

a party puts a vastly inflated value on something which just does not make sense.

The theory behind this potential psychological block suggests there are 2 possible explanations for this seemingly irrational behaviour both of which can be facilitated within the mediation process:

  • the “endowment effect”, and
  • the “inner chimp”


The Endowment Effect

The endowment effect was first observed back in the 1980s at the University of Chicago, when economist Richard Thaler carried out his ground breaking studies.[1] In Thaler’s study participants were given a mug and then offered the chance to sell it or trade it for an equally valued alternative (in this case, pens). They found that the amount participants required as compensation for the mug once their ownership of the mug had been established, their  (“willingness to accept”) was approximately twice as high as the amount they were willing to pay to acquire the mug (“their willingness to pay").

Simply put, it became apparent that once someone owns something, they place a higher value on it than they did when they first acquired it. They become endowed with a sense of possession, of “mine-ness”.

This behaviour is evident in a variety of dispute areas – from boundary disputes, disputed wills, rights of way, and even shareholder disputes. Let us consider the example of the boundary dispute. Often the strip of land is small, it has no real value, and in reality, there is nothing either party can do with that land. Why then, are these disputes so fiercely and emotionally fought? Is it as simple as an Englishman’s home is his castle? Not quite.

One side has usually been in physical possession of the land, and as such has an almost sentimental attachment to this object, a feeling of “mine-ness”. Consequently, that party will want far more for that strip of land than is reasonable, and more than the other party is willing to pay. The other side may have the legal title to the land, and as such feels ownership towards it and consequently will not be willing to part with the land for what would ordinarily be a reasonable sum. It would seem that each party may be willing to pay less to buy the land than it wants to receive, if it were to sell that land. This is often the stalemate reached in boundary disputes.

Expectations of what is “mine” are another area where the endowment effect takes hold. In disputed will cases there are often those who have always assumed they would inherit certain things; children expect to inherit from their parents, but what happens when that one child who has cared for their parents expects to receive more than her sister who lives abroad? How do we deal with the “mine-ness” issues that our clients have?


The Inner Chimp

In addition to this we are often faced with dealing with the “Chimp Paradox”. Professor Steve Peters in his book “the Chimp Paradox”, explained this as the “inner chimp” that we all have, the more basic, primal version of ourselves, whose primary drivers are power, territory, dominance and self-preservation.

Knowing about our inner chimp can help mediators and legal professionals deal with our clients, or even the other side, when this less desirable version of ourselves emerges.

Clients in a boundary dispute are already endowed with a sense possession over this strip of land, then add to the mix their inner chimp’s desire for territory and dominance and we can be facing a real block to settlement.

When a party loses their temper and their inner chimp emerges, it is time to take a step back. There is no point in presenting them with logical facts, as their chimp can’t process them. Instead, let them get it out of their system. It is a fact that you can only shout for a minute, after that you run of steam. Once they have got this off their chest you can start with the facts. The worse thing that you can do is fight back at their inner chimp.

 

The Mediation

So how do we as mediators deal with these psychological blocks to settlement?

The answer for the mediator is twofold and we must deal with: 

  • the mind
  • the issue of possession.

The parties need to be in the right state of mind before any meaningful discussions can take place. As Professor Steve Peters explains in The Chimp Paradox, the use of facts, reason, truth, and logic will eventually calm the chimp down. It is not easy and may need much repetition and you can expect to encounter bouts of chimp-anger.

 

The mediator must deal with the issue of possession, that feeling of “mine-ness” that is so key in boundary disputes and disputed wills. One idea is to distance the parties from the item they wish to possess, for example putting their inheritance in a trust for their children or grandchildren. 

Mediation has the benefit in that it allows:

  • The mediator to look for those type of ‘outside the box’ suggestions. If they don’t work then reality testing can be used to explain that with or without their agreement, if matters progress to trial, they face the risks and uncertainty of litigation and may lose what they hold so dear.

 

  • The parties to have a say in what they lose or gain and most importantly retain control – something of which their chimp would definitely approve!

 

 

Victoria Greenwood

[1] Kahneman, Daniel; Knetsch, Jack L.; Thaler, Richard H. (1990). "Experimental Tests of the Endowment Effect and the Coase Theorem"