The line between a ‘yes’ and a ‘no’- to – settlement decision in negotiation is very thin. The last straw is often what it
takes to move parties from a persistent “no” to a willing “yes”. It is true for our everyday-life small decisions like buying
a pair of shoes as for large-scale government decisions like accepting a peace plan or going to war. What pushes people to
their ultimate decision in negotiation? What are the forces that operate and how do they relate to and interact with each
other when a party considers whether to accept or reject a settlement at a certain point in time?
This article suggests that the decision to settle or not to settle is the result of an overall balance between
pro-settlement and anti-settlement forces on three dimensions: rational-economical, emotional and psychological. It asserts
that there is no need to overcome all obstacles and to find cure to all concerns the parties may have in the negotiation, but
merely to create enough incentives to settle that would overweigh disincentives at a given time.
It also argues that although the nature of the forces we are dealing with is very different, they are able to offset one
another and make tradeoffs with each other. Emotional pro-settlement forces may offset economical anti-settlement ones,
psychological barriers may be offset by rational incentives to settlement, and so on. The use of offsets and tradeoffs
between dimensions are strategies to create extra value in the negotiation (Mnookin and others, 2000, pp.12-15), which may
facilitate a settlement between the parties where one could otherwise either not be achieved or be less satisfying to one or
both parties (Menkel-Meadow, 1984, pp. 754, 795, 809-813).
The first section of the article identifies the forces for and against settlement operating on a party faced with a
settlement decision. It proposes a model, built on the principle of a weight scale, to map, weigh, and present the forces as
means to better understand the parties’ needs and indicate whether a party is likely to agree to settle at a certain point in
time or not, and why.
The second section suggests two strategies to promote settlements based on the capability of the forces to offset each other
and make tradeoffs with one another while being measured by the same “weight units”. One such strategy is by means of
cross-dimensional offsets, which basically means a party’s needs on one dimension may offset its needs on another dimension
in a manner that would bring him or her closer to agree to settle. For example, emotional pro-settlement forces may offset
economical anti-settlement ones, psychological barriers may be offset by rational incentives to settlement, and so on.
The other strategy is by tradeoffs between the parties of “goods” on different dimensions, for example, when one party offers
the other a gesture that will satisfy an emotional need of the other party and the other party in return offers an economical
concession that will satisfy an economical need of the first party. In the event they both value what they have been offered
more than what they offered, they will both be closer to agree to settle after the tradeoff than before.
Although the analysis in this article may generally apply to both deal and dispute negotiation, it will focus on
negotiations in the context of dispute resolution.
I The Decision to Settle is Put on a Scale – Incentives and Disincentives on Three Dimensions
1. The Operating Forces
A party is likely to opt to settle when she perceives overall gain in terms of need satisfaction in so doing (Binder
and others,1991, p.33). This is regardless of whether this process was a reasoned or even conscious one or not (Golann, 1996,
p.309). But what is such a perception or feeling made of? What building blocks and materials construct it?
A party’s mental state, whether in the course of the negotiation or upon decision to settle, is as complex as the human mind
and as diverse as the number of humans in the universe. Fully and comprehensively understanding it is yet far beyond us.
Giving this, the only possible analysis of the decision to settle is based on general categories of factors.
This article perceives the decision to settle as consisted of three categories of forces or three dimensions:
rational-economical, emotional and psychological. Every negotiation involves them, every negotiator is affected by them, and
every decision to settle is built from and driven by forces on and in between them. Furthermore, they should all be regarded
as equal players, meaning equally legitimate and potentially equally powerful – the actual relations between them varies from
one case to another. Like rational-economical forces, emotional and psychological ones may push either for or against
settlement, they should not be regarded as merely “barriers” to resolution but also as potential promoters of it.
The emotional dimension is distinguished here from the psychological one for two reasons. One is qualitative, the other
quantitative. The qualitative reason is the different nature of the emotional and psychological factors discussed here and
the way each of them affects the decision making process. While emotional phenomena, like anger, jealousy, love, sadness,
joy, etc. are ones we tend to feel, psychological phenomena, such as partisan perception, judgmental overconfidence, etc.
tend to be ones we think. While the psychological phenomenon discussed here tend to be cognitive and work their way through
our mind, the emotion’s path is through our heart. The quantitative reason for the distinction is the heavy weight and
important roles both emotional and psychological factors play in negotiation, a role which entitles both of them to an
independent category. 
It is true, nonetheless, that the whole division into dimensions is somewhat artificial, as rational-economical,
emotional and psychological elements are so intertwined. However difficult, the effort is worthwhile. The deconstruction of
the decision making process into the fragments of the different forces offers a comprehensive analysis and understanding that
is sure to enable better addressing barriers to resolution and better promoting satisfying solutions.
1.1 The Rational – Economical Dimension
The rational-economical model traditionally assumes that people strive to maximize their own gains, without regard to the
gains of others (Gould, 1973, p.279). Thus, when we weigh the pros and cons of a settlement we usually mean to rationally
assess the economical gains we acquire through the deal compared with the economical losses. Economical gains or losses in
this sense may refer to money or anything that has money value as well as other assets and gains that are not usually
measured in monetary terms, such as, for example, national security and child custody. Accordingly, rational-economical
incentives and impediments to settlement may be of different types and nature.
1.1.1. Rational-economical incentives to settle
Rational-economical incentives to settle may be divided into two types of incentives, deal-central and deal-peripheral
incentives. The former relates to the core conditions of the deal, while the latter relates to incentives external to the
deal in-and-of-itself. Once a settlement agreement is reached, the former would typically be translated to explicit terms in
the settlement agreement while the latter would tend to take a more implicit and indirect shape. Examples of deal-central
incentives include, in a divorce negotiation (from the perspective of the wife), a sum offered by the husband in which he
agrees to pay the amount of child support requested by the wife; a five years term option to renew a lease contract instead
of the three requested by the lessee (from the perspective of the lessee), etc. Deal-peripheral incentives may be, for
example, incentives to reduce costs of litigation, save time and energy of the involved persons and gain certainty of the
result over the risk of an adverse decision.
1.1.2. Rational-economical disincentives to settlement
Rational-economical disincentives to settlement are basically the mirror image of the incentives mentioned above. Just as
the rational-economical incentives, they too may be either a central, usually explicit part of the deal or a peripheral,
implicit one. Following are a number of examples for deal-central disincentives: from a perspective of a buyer of goods, the
refusal of the seller to guarantee the quality of the goods; from the perspective of a seller of goods, the refusal of the
buyer to put a down payment; from a perspective of an employee, a request by the employer to add extra hours with no extra
payment, etc. Examples for deal-peripheral disincentives may include having a constituency that is likely to oppose the deal
or when a party benefits from the lapse of time.
1.2. The Emotional Dimension
Similar to rational-economical interests, people have emotional interests or needs. What do we mean by “emotional”? Anger,
fear, regret, relief, hope, disappointment, shame, guilt, pride, envy, jealousy, malice, pity, indignation, revenge-seeking
anger, hatred, contempt, joy, respect, grief, romantic love, affection, physical attraction, resentment and alienation
(Elster, 1999, p.241) is a non exhaustive list of emotions.
Emotional needs, such as the desire for love, status, recognition, and so on profoundly influence patterns of thought,
attitude, and behavior (Binder and others, 1991, p.33). Disputes are no exception, regardless of whether the disputants are
family member or states. During the American – Mexican negotiation over the price of Mexican natural gas, when the U.S.
Secretary of Energy refused to approve a price increase negotiated between Americans and Mexicans, the Mexican government
reacted by burning the gas rather than selling it in a lower price. The reason for such an utterly irrational act was that
the Mexicans had an interest not only in getting a good price but also in being treated with respect and a sense of equality
(Fisher and others, 1991, p.49). Lawrence Susskind, an experienced mediator, once said:
“I don’t assume some perfect rationality from everybody in the room. I assume, first, that emotion will overcome logic
during the course of the process. Almost everybody will often do things that, if they thought about them beforehand and were
asked, “Would you do that?” they’d say, “No”. but they – we – will do it anyway, because emotion dominate logic.” (Lawrence
Susskind in Golann, 1996, p.188).
Emotions may take the form of either pro-settlement or anti-settlement forces and will be referred to here as “emotional
incentives to settlement” and “emotional disincentives to settlement”.
1.2.1. Emotional Incentives to Settlement
Emotional incentives to settlement are emotional motivations to reach a settlement or emotional benefits or rewards
anticipated as a result of a settlement. Stress relief, recognition, honor, revenge, satisfaction, sense of belonging and ego
boost and appreciation are examples of emotional rewards that may be gained by means of a settlement.
1.2.2 Emotional Disincentives to Settlement
Emotional disincentives to settlement are emotions adversely affecting a decision to settle or emotional “reasons” why not
to enter a settlement. Among emotional disincentives may be distrust, anger, humiliation, resentment, fear, contempt,
embarrassment, loss of face and disappointment. Some of these emotions affect negotiations at the basic level of
communication inhibiting a true and constructive discussion of the issues, while others are perceived as adverse effects of
entering into a settlement.
1.3. The Psychological Dimension
Negotiation is a psychological process (Moore, 1996, p.124). Nonetheless, it appears that a full and comprehensive
understanding of the psychological phenomena affecting negotiations is still beyond our reach. The ones already explored
essentially attempt to explain parties’ irrational attachment to positions (Golann, 1996, p.200). They all seem to be closely
connected to the way we think about, judge and interpret our surrounding, as if each was an invisible screen we look at the
world through while thinking we see reality as it is. Clearly, when we are affected by such phenomena, we are not thinking
rationally (Elster, 1999, p.45).
Psychological Phenomenon known to affect people in dispute (Arrow and others, 1995, pp.145-160; Mnookin and other, 2000,
pp.156-165; Golann, 1996, pp.200-201) include: partisan perception, which is people’s tendency to construct a reality of the
conflict based on what they expect and wish to see and what is in their self-interest to see; selective perception, which
refers to people’s tendency to unconsciously screen out any new data that do not fit their existing view of a situation;
judgmental overconfidence, which is people’s tendency to overestimate their ability to predict future events. There are two
aspects to this phenomenon, one is the level of accuracy in one’s basic judgments and the other is the extent to which one is
used to assess the risk he or she is wrong; loss aversion, which basically means most people hate to lose more than they love
to win. In other words, people tend to attach greater weight to prospective losses than to prospective gains; reactive
devaluation, which means the source of a proposal affects the evaluation of the proposal. An offer that is believed to come
from an opponent is likely to be devalued by the receiving party comparing to a situation where the same offer is believed to
come from a neutral or an ally. Equity theory is yet another psychological phenomenon, although not usually found in
negotiation literature, which proposes that individuals try to achieve justice in their relationships with others and feel
distress when they perceive injustice, even if they benefit from it (Moghaddam, 1998, p.480).
1.3.1 Psychological Incentives to Settlement
Psychological incentives to settlement are pro-settlement motives deriving from psychological phenomena. Here are some
examples: For a plaintiff, an offer that provides her with certainty of winning a less than expected sum rather than a gamble
on a larger gain through litigation (with the risk of a larger loss) due to loss aversion; for either party, when the
settlement is framed to appear as at least equal to their respective minimum non-loss point (beyond it is perceived as a
loss), again due to loss aversion; a party’s perception of a settlement as fair and equitable one, as suggested by equity
theory, and a party’s wish to meet a deadline.
1.3.2. Psychological Disincentives to Settlement
Psychological disincentives to settlement are inhibitors to settlement derived from psychological phenomena. Following are
examples of the ways they may occur: Misevaluation and underestimation of a settlement offer due to partisan and selective
perception; misjudgment and overestimation of the trial option and as a result the settlement option due to judgmental
overconfidence; and devaluation of an offer or a concession by the opponent due to reactive devaluation.
2. Putting the Operating Forces on a Scale – A Three Dimensional Balance Model (TDBM)
Once the operating forces for and against settlement are identified, the next step is to weigh them one against the other
and see whether a party is likely to agree to a settlement or reject it and why. The tri-dimensional – balance model (“TDBM”)
offers a three steps way to do that.
The model features the three dimensions described above, the rational – economical, emotional and psychological, as
the source of various forces operating on the same pivot, the decision pivot. Each dimension is comprised of two opposite
forces, incentives and disincentives. A party’s decision to settle is likely to occur when the overall forces on the
incentives side overweigh the overall forces on the disincentives side. Following are the three steps for using the TDBM.
Step one: Mapping
Mapping is done by identifying a party’s incentives and disincentives to enter a settlement on all three dimensions discusses
above, the rational-economical, the emotional and the psychological. A settlement could be either a concrete settlement offer
or a hypothetical settlement based on the other party’s position. The model stresses the importance of a subjective
evaluation in the sense that any identification and evaluation of incentives and disincentives must be done entirely from the
perspective of the subject of evaluation and not by using some external standards (Binder and others,1991, p.263).
A possible way of mapping the different incentives and disincentives is using a table such as the following:
|Rational – Economical|
Step two: Evaluating
The next step would be to evaluate the relative weight of the incentives and disincentives. Obviously, when the task is to
quantify thoughts and feelings one should not expect perfect accuracy. Rather, the goal is to be able to roughly assess the
relative weight of the operating forces – incentives against disincentives on each dimension and in-between dimensions. At
minimum, such assessment should be able to detect, for example, strong emotional issues that impede settlement, how those
relate to the economical issues involved and whether there are substantial psychological affects that bias perception.
Evaluation should be first done for each incentive and disincentive, to be later on accumulated to the total weight of
incentives and disincentives on each dimension. For the purpose of evaluation different techniques may be employed. The most
accurate would be the numeric one, attaching to each incentive and disincentive a number on an ordinal numbers series, to
reflects its relative power (Brams and others, 1999, pp.9-10,70-79, on attaching numerical values to different items in
dispute negotiations). For example, using a scale of numbers between –10 to 10 and attaching different values to incentives
and disincentives on the scale, such as 5 to a particular rational incentive, -6 to a particular emotional disincentive and
–2 to a certain psychological disincentive. Each incentive or disincentive is actually rated on a 0 – 10 scale, only that
disincentives have negative values, thus are marked by the minus sign. Another method of attaching values may be by using a
scale of importance. Thus, for example, the least important incentives or disincentives would be tagged as “minor
importance”, and so on “low importance”, “medium importance”, “very important”, “extremely important” and so on. While this
method may provide a general idea of the relative strength of the operating forces, when there are many such forces on both
the incentives and disincentives sides, it may fail to give a clear picture of the relative weight of each force. However,
sometimes this is the best one can do, either because there is not enough information for precise numerical evaluations or
because one is uncomfortable with such.
Once this detailed evaluation is complete, an aggregate value should be attached to the total incentives and disincentives on
each dimension. For example, when there are some psychological barriers, very strong adverse emotions and a very large
economical gap the aggregate values of disincentives may be –4 for the psychological, -7 for the emotional and –10 for the
Step three: Presentation
When aggregate values of incentives and disincentives have been articulated, a simple graphic presentation of the results may
help clarify the picture. A graphic numeric presentation of incentives versus disincentives on each dimension may look as
|Rational – Economical||<--------------------||—->|
|-5 -4 -3 -2 -1||0 1 2 3 4 5|
Figure 2 represents a party’s state of mind towards a proposed settlement, similarly to as if put on a three head scale. The
arrows are vectors representing different degrees of importance or weight of the operating forces, whether incentives or
disincentives, on each dimension. In this example, the party has strong rational disincentives to settle (5 units),
substantial psychological impediments (4 units) and some emotional disincentives (2 units), against mild incentives to settle
on the rational and emotional dimensions (2 rational, 1 emotional). The overall balance is thus 8 units against the
settlement, mostly due to rational considerations and psychological factors.
At this point, after identifying, evaluation and mapping of incentives and disincentives, whoever properly used the TDBM
should have a fairly broad understanding of each party’s state of mind, the various interests and needs as well as what seems
to interfere with its judgment. Doing it for both parties will enable to assess how far the parties are from reaching an
agreement and what are the main forces keeping them away from it.
Following is an example of how the TDBM may work in practice.
An application of the TDBM
Joe is the founder and CEO of a small company (“company X”) engaged in the business of distributing toys of a large toys
manufacturer (“company Y”). The two companies have a long-term distribution agreement. Jack is the new CEO of company Y,
brought in after company Y showed decreasing profitability. That’s when Joe’s troubles started.
Jack called Joe for a meeting and demanded that company X will reduce its share from selling the product so company X can
increase its share, otherwise company X will no longer be company Y’s distributor. Joe refused and the parties soon found
themselves in court fighting over the enforcement of the agreement with claims from both sides. In the course of the court
proceedings, Jack invited Joe to discuss possibilities to settle the case. During their conversation, Jack offers Joe one
fifth of Company X’s claim and withdrawal of company Y’s claim against company X. Will Joe accept this offer?
Step one: Mapping
Looking from Joe’s perspective, what might be his incentives and disincentives to take the offer?
|Rational – Economical||1.The agreement entitles company X to much more than Jack’s offer;|
2. Good chances to win in court.
|1.Save legal costs;
2.Save time and energy of the court proceedings;
3.A chance for future commercial relationship
with company Y;
may expose information he prefers to keep in secret.
|Emotional||1.Seeks revenge for what he perceived as a bad faith behavior of company Y and Jack.2.Antagonism to anything Jack
proposes as a result of sensing he is patronizing and trying to intimidate Joe.
|1. Never been in court, afraid of the court process and its results.|
|Psychological||1.Reluctance to settle as a result of overestimating the chances to win in court, strengthened by his lawyer’s advice
(judgmental overconfidence, partisan and selective perception).2. Discounts the offer because it came from Jack and company Y
Step two: Evaluating
In the stage of evaluating, each incentive and disincentive is attached a relative value to indicate its relative degree of
importance to the party or the intensity to which it affects the party’s decision. Evaluation is best performed by someone
who has enough information and insight about the person subject to evaluation and is able to minimize own biases, such as a
professional mediator who spent sufficient time with the parties.
I will use in this case a scale of 1-10 to rate each incentive and disincentive mapped above, with incentives having positive
values and disincentives negative ones.
|Rational – Economical||1.The agreement entitles company X to much more than Jack’s offer; 8 |
2. Good chances to win in court.5
|1.Save legal costs; 3
2.Save time and energy of the court proceedings; 2
3.A chance for future commercial
relationship with company Y; 0.5
|Emotional||1.Seeks revenge for what he perceived as a bad faith behavior of company Y and Jack; 5|
2.Antagonism to anything
Jack proposes as a result of sensing he is patronizing and trying to intimidate Joe. 6
|1. Never been in court, afraid of the court process and its results. 1|
|Psychological||1.Reluctance to settle as a result of overestimating the chances to win in court, strengthened by his lawyer’s advice
(judgmental overconfidence, partisan and selective perception). 2
and company Y (reactive devaluation). 1
Note that factors on all three dimensions may overlap each other and cause discrepancies in the evaluation results. Here,
for example, the psychological bias of overestimating the chances to win in court clearly overlaps the rational economical
evaluation of the offer. The way to cure discrepancies as this is by identifying and discounting the excess value. If the
evaluation of the court results weighs 7 units as a disincentive, the 7 units should be allocated between the
rational-economical and the psychological dimensions (here 5:2).
Stage 3: Presentation
After calculation of the aggregate values of incentives and disincentives on each dimension, the vector presentation provides
a graphic illustration of the operating forces and how they weigh against each other on the three dimensional scale. See
|Rational – Economical||-13 <------------------||—->7|
|-18-16-14-12-10-8-6-4-2 0||2 4 6 8 10 12 14 16 18|
The results presented in Figure 5 make clear that Joe’s disincentives to settle, from his perspective, largely overweigh his
t is likely to keep blocking settlement offers, even if monetary value is substantially increased, as long as emotional
disincentives are not reduced or emotional incentives are generated. This information should be particularly useful for Jack
as well as a mediator when planning their next steps in the negotiation.
III Strategies to Promote Resolution: Cross-Dimensional Offsets and Cross-Dimensional Inter-Party Tradeoffs
One important assertion embedded in the TDBM is that incentives and disincentives on the rational-economical, emotional and
psychological dimensions can offset each other in an overall balance we process in our minds. The possibility to create
offsets between dimensions may have important practical implications for negotiation and dispute resolution processes. One is
the understanding that there is no need to overcome all obstacles and to find cure to all concerns the parties may have in a
given negotiation, but merely to create enough incentives to settle that would overweigh disincentives. Based on this
understanding and on the theory of offsets between dimensions, this section presents two methods to promote settlements,
“cross-dimensional offsets” and “cross-dimensional inter-party tradeoffs”.
1. Cross-Dimensional Offsets
The technique of cross-dimensional offsets is the adding of incentives to settlement on one dimension to offset
disincentives to settlement on another dimension. For example, enlarging the rational-economical gains for a party may
overcome an emotional element that inhibited it from settling, and vice versa, adding an emotional motivation may facilitate
rational-economical concessions. The offsetting forces, however, may come from different sources, such as the other party, a
third party or from within the party itself. An example for cross-dimensional offsets coming from a third party is when a
mediator reminds a party of the legal costs, the time and the energy she will be saving by settling, thus creating a
rational-economical incentive for her that may offset an emotional disincentive which has been blocking a settlement.
The following example involves cross-dimensional offsets – the source of which is the other party. It is a dispute between a
landlord and a tenant – Turnbull Vs. Jones Realty (The example is taken from Fisher and others, 1991, p.119. Described here
is only a portion of the negotiation, which is relevant to the discussion here). Turnbull rented an apartment from Jones
Realty for $600 a month. When he wanted to move out he discovered that the apartment was under rent control, which provided
for a maximum rent of $466. Disturbed that he had been overcharged, he turned to Mrs. Jones from Jones Realty to ask for
reimbursement. Mrs. Jones was unreceptive and hostile and accused Turnbull of ingratitude and blackmail. Nonetheless, after a
number of negotiation sessions Mrs. Jones agreed to reimburse Turnbull and her tone became friendlier and apologetic.
One of Turnbull moves in the negotiation was an appeal to Mrs. Jones’ sense of equity and fairness. He said to her: “We want
to know that we didn’t pay more than we should have. When we’re persuaded that the rent paid measured up fairly to the time
spent in the apartment, we’ll call it even and move out.” By saying this Turnbull created a psychological incentive for Mrs.
Jones to reach a fair result, which was based on Turnbull’s suggested criteria for fairness.
Another thing Turnbull did was telling Mrs. Jones how much he and his roommate appreciated what she had done for them. He
said: “Paul and I understand you were doing a personal favor by renting us this apartment. You were very kind to put in the
time and effort and we appreciate it.” By saying that Turnbull created for Mrs. Jones an emotional incentive to keep
appearing as a kind and generous person. As put by Fisher and Ury, “praise and support, moreover, imply that the person will
continue to deserve them. After being praised, Mrs. Jones now has a slight emotional investment in Turnbull’s approval of
her. She has something to lose and as a result act more conciliatory.” The parties reached an agreement along the lines
suggested by Turnbull.
For Mrs. Jones, then, psychological and emotional incentives, introduced by Turnbull, offset her preliminary
rational-economical as well as emotional disincentives, to a point where overall incentives overweighed overall
2. Cross-Dimensional Inter-Party Tradeoffs
Cross-dimensional inter-party tradeoffs operate quite similarly to cross-dimensional offsets only that while
cross-dimensional offsets focus on each party in and of itself and do not necessarily involve interaction between the
parties, cross-dimensional inter-party tradeoffs focus on the exchanges of “goods” on different dimensions between the
A cross-dimensional inter-party tradeoff occurs when, for example, one party does or says something that is emotionally
beneficial to the other party, although emotionally inconvenient to it, and in return the other party is making economical
concessions, also beneficial to the other side and inconvenient to it. In such case the parties have traded “goods” on two
different dimensions, economical and emotional (Menkel-Meadow, 1984, pp.838-839 for the proposition that psychological needs
may be part of the utilitarian calculus of needs; p.795 for the concept of trading off different needs). Following are two
examples of situations where cross-dimensional inter-party tradeoffs may occur.
Apology is a good example of the possibilities of cross-dimensional trade-offs. The following case deals with a
dispute between a secretary whose job was terminated and the company she used to work for, represented by the manager who
initiated the termination (the case is taken from Levi, 2000, p.147).
Lynn worked for XYZ Pharmaceutical Company as a secretary for nine years. She was recently assigned to the new vice
president, Maureen. One of Lynn’s responsibilities was opening e-mail when Maureen was out of the office, and one day Lynn
opened an e-mail from the company president that read: “What to do about disposing of that unfortunate chemical . . . Maybe,
we could just let it float out to sea”. Alarmed by what she believed to be an unlawful proposal, Lynn copied the e-mail and
sent it to state environmental authorities. When Maureen found out, she was furious about the breach of confidentiality,
particularly because the e-mail had been part of a continuing joke between Maureen and the company president. She fired Lynn,
and Lynn sued for wrongful termination.
The next time Maureen and Lynn see each other is in mediation of their suit. The parties are hundreds of thousands of dollars
apart, and there is no agreement when the parties break for lunch. After lunch, Maureen asks if she can say something. She
begins, “Lynn, I am so sorry for having discharged you. I understand that, after so many years, it must be very hard to start
over again looking for a job. I realize now that when you read that e-mail, you must have thought we were dumping chemicals,
and in that context you were right to notify the authorities. You are a fine secretary, and I acted on impulse out of fear
and rage, and I should have asked for your side of the story rather than simply firing you. I deeply hope we can do something
to end this suit.”
Everyone is silent for a long moment. Then Lynn takes a deep breath and replies, “I suppose that when I read that e-mail, I
may have jumped to conclusions. Maybe we can work something out.” By the end of the day, the parties work out a settlement
that is fair to each, with the company compensating Lynn based on a realistic estimate of lost wages and Lynn promising to
cooperate in the company’s response to government inquiries.
What essentially happened in this case was an exchange of apology for money. Maureen, by offering her apology, went through
the inconvenience of admitting her wrongdoing, justifying to some extent Lynn’s acts and risking a non-responsive reply from
Lynn. Lynn, on her part, accepted the apology and, in return, in addition to taking some of the blame on herself, agreed to
substantially reduce her money demands.
Indeed, a sincere apology can go a long way in resolving disputes (Cohen, 2000, p.171). Some of the potential gains
of an apology are that the plaintiff might forgo suit; the settlement process could be greatly facilitated; legal fees would
be reduced; punitive damages may be avoided; damaged relationships may be repaired; the injurer may get psychological and
spiritual benefits (such as reduce guilt); the injurer’s reputation as a responsible person or organization may be enhanced;
and the injurer’s ability to prevent future errors may be improved (Cohen, 2000, p.171).
The following example involves an executive and a company represented by its CEO in dispute over the termination of the
executive (The example is taken from Golann, 1996, p.7).
An executive was hired by a technology management firm with great expectation, but fired only a few months later on the
ground that his behavior and decision-making had been erratic. He sued for nearly two years’ salary and payments under his
contract. The company’s CEO refused to pay a dime. Through a mediation process the mediator learned that the executive was
secretly undergoing treatment for a brain tumor, which explained his behavior, created an urgent need for continuation of
health coverage and conceivably raised a claim for disability discrimination. With the permission of the executive the
mediator reveled the issue to the CEO. At this point the CEO lost much of his anger, the executive himself became less rigid
and the parties quickly worked out a severance package that included key hospital coverage.
In this example, like in the apology case, the trade-off was primarily between the rational-economical and the emotional
dimensions. This time it was the personal information about the executive’s medical condition that triggered the exchange.
The disclosure of the sensitive information about the executive’s health condition to the CEO was followed by an emotional
reaction of the CEO and the creation of an emotional (compassion, mercy) incentive to settle the case in a satisfactory
manner to the executive (some economical incentive was probably created as well considering the possibility of a future
disability discrimination claim although no such one was initiated at that time). As a result of the new incentives,
economical concessions were made possible. The executive, on the other hand, had to go through the inconvenience of
disclosing private information he would have otherwise kept secret, constituting an emotional disincentive, but gained
important economical benefits and better relationship with the CEO, which apparently compensated for the embarrassment.
Cross-Dimensional Inter-Party Tradeoffs and Creating Value
Recent negotiation and dispute resolution literature talks much about the potential of creating value in negotiations
(Mnookin and others, 2000, pp.12-15). Creating value, sometimes called “enlarging the pie”, basically means adding valuable
factors to the negotiation, thereby having more to distribute, for the purpose of increasing the parties’ satisfaction
comparing to other settlement alternatives. Creating value may also help generate more possible solutions (Menkel-Meadow,
1984, pp. 795, 809-813). One of the distinctive sources for creating value is differences between the parties. When two
people have different resources or they attach different relative values to the same resources, swapping what they have may
make one or both of them better off (Mnookin and others, 2000, p.14).
Cross-dimensional inter-party tradeoffs work the same way. First, a multi-dimensional perception in and of itself is a way of
creating value, by virtue of acknowledging a wide range of interests, needs and concerns the parties may have beyond
rational-economical goals. Second, tradeoffs between needs on different dimensions may operate very similarly to conventional
economical tradeoffs. Just like oranges can be exchanged for apples, money can be exchanged for emotional satisfactions. And
just like two people may value differently oranges and apples, they may value differently money and some emotional
satisfaction in particular circumstances.
But are emotional and psychological “goods” really the same as economical goods? Why is it that we may feel uncomfortable
talking about trading emotions for money? This goes down to a moral and a practical issue, for which we should differentiate
between cross-dimensional tradeoffs and conventional rational-economical tradeoffs. The moral issue is the notion that
emotions are private human feelings that should not be abused by trading them for economical gains and should not be measured
in monetary terms and subject to haggle on how much they worth. The practical issue is that putting emotional and
psychological factors on the table in the same line with economical gains may create incentives for the parties to fake
emotional and psychological disincentives in attempt to win economical gains.
As for the moral issue, although it may feel uncomfortable at times, weighing and evaluating the importance of emotional and
psychological factors in similar terms to rational-economical ones should not be an obstacle if it serves the objective of
better understanding the parties’ needs in negotiation and promote resolution of conflicts.
As for the practical concern that the parties might manipulate on, fake and misuse emotions and psychological factors, this
concern is hardly new in the negotiation sphere. Parties pull all kinds of tricks and acts, some psychological (like playing
the “underdog”), and some emotional (like storming away from the negotiation table). The cure to such manipulations is mostly
to be sensitive to them, to detect bad faith when it exists or to learn how to translate them to the true motivations of the
party who uses them.
The negotiation process cannot escape the complexity of people’s minds. When considering a settlement option, the negotiator
is subject to a variety of forces of different nature and intensity, operating either for or against settlement. Incentives
and disincentives of rational-economical, emotional and psychological nature line up on a virtual scale to determine the
balance between a ‘yes’ and a ‘no’ to settlement.
Rational-economical considerations constitute only one dimension of the decision to settle, not necessarily the most
influential one, as emotional and psychological factors often have a role in the decision much more central than we realize.
Moreover, emotional and psychological elements are not merely distracters that should be disregarded or obstacles that should
be removed, but are real, vigorous, and legitimate forces that may either promote or inhibit settlement.
The TDBM may be a useful tool to identify, evaluate and weigh the operating forces and make the balance between them. It
encourages a broad and thoughtful analysis of the parties’ state of mind, and heart. It forces looking from the subjective
point of view of each party, looking at the situation through their respective eyes. Thinking TDBM also means using same unit
values for different dimensions. Thus, rational-economical, emotional and psychological forces may be weighed against one
another to determine their relative weight in the decision whether to settle or not.
If promoting a settlement is the goal, the use of setoffs and tradeoffs between dimensions may change the balance from a
position against settlement to one for it. Both strategies, setoffs and tradeoffs, rely on the understanding that there is no
need to remove all obstacles to settlement or to deal with each dimension separately, but rather to reach an overall balance
weighing, even slightly, in favor of the settlement.
1 The human thought of emotions existed much before the psychological analysis of the emotions, which is
only a hundred years old. Modern psychology is limited in its attempt to explain the wide range of emotions (Elster, 1999,
Arrow K., Mnookin R.H., Ross L., Tversky A., Wilson R., Barriers to Conflict Resolution. W.W. Norton & Company, 1995.
Binder D.A., Berman P., and Price S.C., Lawyers As Counselors. West, 1991.
Brams, S.J. and Taylor A.D., The Win-Win Solution. W.W. Norton & Company, 1999.
Cohen J.R., “Encouraging Apology Improves Lawyering and Dispute Resolution”, Alternatives, 2000, 18(9), 171.
Elster J., Alchemies of the Mind Rationality and the Emotions. Cambridge University Press, 1999.
Fisher R., Ury W. and Patton B., Getting to Yes: Negotiating Agreements Without Giving In. (2nd ed.) New York: Penguin Books,
Golann D., Mediating Legal Disputes. Little, Brown, 1996.
Gould, J.P. “The Economics of Legal Conflicts”, Journal of Legal Studies, 1973,2,279.
Levi D., “Why Not Just Apologize? How To Say You’re Sorry in ADR”, Alternatives, 2000, 18(8), 147.
Menkel-Meadow, C. “Toward Another View of Legal Negotiation: The Structure of Problem Solving.” UCLA Law Review, 1984, 31,
754, 795, 809-813.
Mnookin R.H., Peppet S.R. and Tulumello A.S. Beyond Winning: Negotiating to Create Value in Deals and Disputes. Cambridge,
Massachusetts: Belknap Harvard, 2000.
Moghaddam F.M., Social Psychology: Exploring Universals Across Cultures. Freeman, 1998.
Moore C.W., The Mediation Process. San Francisco: Jossey-Bass, 1986.
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