Arbitration & Mediation

It's About Fairness, Dummy!

By Victoria Pynchon

(right:  is the key to settlement really money?)

This is the dialogue I often have when attorneys (and some mediators!) suggest to me that the settlement of litigation is "only" about money.

V[ickie]:   "Why do people seek out your services?"

A[ttorney]:  "Because [i.e.,] they've been ripped off or injured or sued; someone used their intellectual property without permission, interfered with their business; lied to them about the scope of the software license; refused to pay their covered claims . . . . etc. etc. etc."

V:  "But why did they seek you out?  Why do people hire lawyers?  Why do people turn to the justice system?  

A:  "Because they want justice?"

V:  "Yes!  they are looking for fairness; not money."

Still, the skeptics fix me with a suspicious eye and say, "well let's just see about that."

Listen, all too often the people who monetize justice -- who translate what is unfair into a monetary sum -- are the very people who seek me out to help them depress their clients' unrealistic monetary expectations.  Part of my business is to re-translate money back into fairness.

So it is always with pleasure that I point my readers to that which confirms my existing world-view (a cognitive bias that I will not resist this morning).

Take a look at yesterday's L.A. Times article, "Why People Believe Weird Things about Money" by Michael Shermer, author of The Mind of the Market:  Compassionate Apes, Competitive Humans, and Lessons from Evolutionary Economics. 

The executive summary?  It's not about money -- it's about fairness.  Excerpt below:

Consider one more experimental example to prove the point: the ultimatum game. You are given $100 to split between yourself and your game partner. Whatever division of the money you propose, if your partner accepts it, you each get to keep your share. If, however, your partner rejects it, neither of you gets any money.

How much should you offer? Why not suggest a $90-$10 split? If your game partner is a rational, self-interested money-maximizer -- the very embodiment of Homo economicus -- he isn't going to turn down a free 10 bucks, is he? He is. Research shows that proposals that offer much less than a $70-$30 split are usually rejected.

Why? Because they aren't fair. Says who? Says the moral emotion of "reciprocal altruism," which evolved over the Paleolithic eons to demand fairness on the part of our potential exchange partners. "I'll scratch your back if you'll scratch mine" only works if I know you will respond with something approaching parity. The moral sense of fairness is hard-wired into our brains and is an emotion shared by most people and primates tested for it, including people from non-Western cultures and those living close to how our Paleolithic ancestors lived.

When it comes to money, as in most other aspects of life, reason and rationality are trumped by emotions and feelings.

Full post as published by Settle It Now Negotiation Blog on January 14, 2008 (boomark / email).