CONTRAST EFFECT AND DISPUTE RESOLUTION – AN EXPERIMENTAL STUDY
Keywords:
contrast effect, negotiation, divorce litigation.
Abstract
The subject of this paper is the contrast effect in negotiations from the behavioral economics perspective. We conducted an experimental study using a “divorce litigation game” with complete information about payoffs aimed at testing whether participants are prone to context-dependent decisions. The sample was created by 100 law students from the Faculty of Law of the University of Niš. In a “between subjects” design 100 different participants were tested in the control and treatment group. The main finding is that there is a statistically significant difference between the two groups, thus confirming the presence of the contrast effect. The study opens the door to further real experiments with an emphasis on other subjects, such as lawyers, checking if they are so “rational”.
References
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Daniel Kahneman, Jack L. Knetsch, Richard H. Thaler, “Experimental Tests of the Endowment Effect and the Coase Theorem”, Journal of Political Economy 98(6)/1990, 1325-1348.
Daniel Watkins, “A Nudge to Mediate: How Adjustments in Choice Architecture Can Lead to Better Dispute Resolution”, The American Journal of Mediation 4/2010, 1-22.
David H. Frisch, Robert T. Clemen, “Beyond Expected Utility: Rethinking Behavioral Decision Research”, Psychological Bulletin 116(1)/1994, 46-54.
Elizabeth S. Scott, “Pluralism, Parental Preference, and Child Custody”, California Law Review 80/1992, 615-672.
Ernst Fehr, Daniela Glätzle-Rützler, Matthias Sutter, “The development of Egalitarianism, Altruism, Spite and Parochialism in Childhood and Adolescence”, European Economic Review 64/2013, 369-383.
Ernst Fehr, Klaus M. Schmidt, “A Theory of Fairness, Competition, and Cooperation”, The Quarterly Journal of Economics 114(3)/1999, 817-868.
Gary Bolton, Axel Ockenfels, “A Theory of Equity, Reciprocity and Competition”, The American Economic Review 90(1)/2000, 166-193.
Gary Charness, Uri Gneezy, Michael A. Kuhn, “Experimental Methods: Between-Subject and Within-Subject Design”, Journal of Economic Behavior and Organization 81/2012, 1-8.
Itamar Simonson, “Choice Based on Reasons: The Case of Attraction and Compromise Effects”, Journal of Consumer Research 16(2)/1989, 158-174.
Itamar Simonson, Amos Tversky, “Choice in Context: Tradeoff Contrast and Extremeness Aversion”, Journal of Marketing Research 29(3)/1992, 281-295.
Jacqueline Nolan-Haley, Alternative Dispute Resolution in a Nutshell, West Publishing Company, St. Paul Minesota 1991.
Joel Huber, Christopher Puto, “Market Boundaries and Product Choice: Illustrating Attraction and Substitution Effects”, Journal of Consumer Research 10(1)/1983, 31-44.
Joel Huber, John W. Payne, Christopher Puto, “Adding Asymmetrically Dominated Alternatives: Violations of Regularity and the Similarity Hypothesis”, Journal of Consumer Research 9(1)/1982, 90-98.
John S. Murray, Alan Scott Rau, Edward F. Sherman, Negotiation, The Foundation Press, Westbury New York 1996.
Linda Babcock et al., “Forming Beliefs About Adjudicated Outcomes: Perceptions of Risk and Reservation Values”, International Review of Law and Economics 15(3)/1995, 289-303.
Mark Kelman, Yuval Rottenstreich, Amos Tversky, “Context-Dependence in Legal Decision Making”, The Journal of Legal Studies 25(2)/1996, 287-318.
Russell Korobkin, Chris Guthrie, “Psychology, Economics, and Settlement: A New Look at the Role of the Lawyer”, Texas Law Review 76/1997, 77-142.
Susan S. Daicoff, “Lawyer, Know Thyself A Review of Empirical Research on Attorney Attributes Bearing on Professionalism”, The American University Law Review 46/1997, 1337-1427.
Theodore Eisenberg, “Differing Perceptions of Attorney Fees in Bankruptcy Cases”, Washington University Law Quarterly 72(3)/1994, 979-995.
Timothy B. Heath, Subimal Chatterjee, “Asymmetric Decoy Effects on Lower-Quality Versus Higher-Quality Brands: Meta-Analytic and Experimental Evidence”, Journal of Consumer Research 22(3)/1995, 268-284.
American Psychological Association, APA Dictionary of Psychology (2nd ed.), Washington DC 2015.
Chris Guthrie, “Panacea or Pandora's Box?: The Costs of Options in Negotiation”, Iowa Law Review 88/2003, 601-653.
Chris Guthrie, Jeffrey Rachlinski, Andrew Wictrich, “Inside the Judicial Mind”, Cornell Law Review 86/2001, 777-830.
Christopher K. Hsee, France Leclerc, “Will Products Look More Attractive Presented Separately or Together?”, Journal of Consumer Research 25(2)/1998, 175-186.
Colin F. Camerer, Behavioral Game Theory: Experiments in Strategic Interaction, Princeton University Press, Princeton New Jersey 2011.
Daniel Kahneman, Jack L. Knetsch, Richard H. Thaler, “Experimental Tests of the Endowment Effect and the Coase Theorem”, Journal of Political Economy 98(6)/1990, 1325-1348.
Daniel Watkins, “A Nudge to Mediate: How Adjustments in Choice Architecture Can Lead to Better Dispute Resolution”, The American Journal of Mediation 4/2010, 1-22.
David H. Frisch, Robert T. Clemen, “Beyond Expected Utility: Rethinking Behavioral Decision Research”, Psychological Bulletin 116(1)/1994, 46-54.
Elizabeth S. Scott, “Pluralism, Parental Preference, and Child Custody”, California Law Review 80/1992, 615-672.
Ernst Fehr, Daniela Glätzle-Rützler, Matthias Sutter, “The development of Egalitarianism, Altruism, Spite and Parochialism in Childhood and Adolescence”, European Economic Review 64/2013, 369-383.
Ernst Fehr, Klaus M. Schmidt, “A Theory of Fairness, Competition, and Cooperation”, The Quarterly Journal of Economics 114(3)/1999, 817-868.
Gary Bolton, Axel Ockenfels, “A Theory of Equity, Reciprocity and Competition”, The American Economic Review 90(1)/2000, 166-193.
Gary Charness, Uri Gneezy, Michael A. Kuhn, “Experimental Methods: Between-Subject and Within-Subject Design”, Journal of Economic Behavior and Organization 81/2012, 1-8.
Itamar Simonson, “Choice Based on Reasons: The Case of Attraction and Compromise Effects”, Journal of Consumer Research 16(2)/1989, 158-174.
Itamar Simonson, Amos Tversky, “Choice in Context: Tradeoff Contrast and Extremeness Aversion”, Journal of Marketing Research 29(3)/1992, 281-295.
Jacqueline Nolan-Haley, Alternative Dispute Resolution in a Nutshell, West Publishing Company, St. Paul Minesota 1991.
Joel Huber, Christopher Puto, “Market Boundaries and Product Choice: Illustrating Attraction and Substitution Effects”, Journal of Consumer Research 10(1)/1983, 31-44.
Joel Huber, John W. Payne, Christopher Puto, “Adding Asymmetrically Dominated Alternatives: Violations of Regularity and the Similarity Hypothesis”, Journal of Consumer Research 9(1)/1982, 90-98.
John S. Murray, Alan Scott Rau, Edward F. Sherman, Negotiation, The Foundation Press, Westbury New York 1996.
Linda Babcock et al., “Forming Beliefs About Adjudicated Outcomes: Perceptions of Risk and Reservation Values”, International Review of Law and Economics 15(3)/1995, 289-303.
Mark Kelman, Yuval Rottenstreich, Amos Tversky, “Context-Dependence in Legal Decision Making”, The Journal of Legal Studies 25(2)/1996, 287-318.
Russell Korobkin, Chris Guthrie, “Psychology, Economics, and Settlement: A New Look at the Role of the Lawyer”, Texas Law Review 76/1997, 77-142.
Susan S. Daicoff, “Lawyer, Know Thyself A Review of Empirical Research on Attorney Attributes Bearing on Professionalism”, The American University Law Review 46/1997, 1337-1427.
Theodore Eisenberg, “Differing Perceptions of Attorney Fees in Bankruptcy Cases”, Washington University Law Quarterly 72(3)/1994, 979-995.
Timothy B. Heath, Subimal Chatterjee, “Asymmetric Decoy Effects on Lower-Quality Versus Higher-Quality Brands: Meta-Analytic and Experimental Evidence”, Journal of Consumer Research 22(3)/1995, 268-284.
Published
2021/01/11
Section
Original Scientific Paper