Which Side Are You On?: Bias, Credibility and Mediation

Abstract:

Mediators are often thought to be more effective if they are unbiased, or have no preferences over the issue in dispute. This paper presents a game theoretic model of mediation drawing on the theory of "cheap talk" which highlights a contrary logic. Conflict arises in bargaining games because of uncertainty about the resolve of the parties. A mediator can reduce the likelihood of conflict by providing information on this score. For a mediator to be effective, however, the parties must believe that the mediator is telling the truth, especially if the mediator counsels one side not to make a large demand because their opponent has high resolve and will fight. An unbiased mediator who is simply interested in minimizing the probability of war will have a strong incentive to make such statements even if they are not true, hence the parties will not find the mediator credible. Only a mediator who is effectively "on your side" will be believed if they counsel restraint. Parties will accept mediators who are biased against them if there are social norms which imply that rejecting mediation is a sign of weakness and something to hide, rather than of strength. There is a social benefit to promulgating such norms, because of the loss involved in letting conflicts go unmediated.