Delivering Objective Criteria: Sources of Law and the Relative Value of Neutral Information for Dispute Resolution

Abstract:     
Negotiation theorists recommend that disputants look for objective criteria when they have to divide the pie. Using objective criteria to decide on the distributive issues may in fact be the only way out of costly negotiations based on personal feelings. The recommendation to use objective criteria, however, has received criticism due to the fact that there is no clear source from which these criteria can be drawn. Disputants who negotiate the compensation of personal injury damages can consult several sources of neutral information that supports them regarding distributive issues. Legal rules provide information about how the outcome ought to be determined, and information about what damages are actually rewarded by courts can be found in case law. Also, commissions, academics, or other market actors may have developed guidelines for calculating specific categories of damages. Finally, lawyers or others involved may share unpublished know how about how other, similar cases have been settled in the past. This paper examines the extent to which neutral information facilitates dispute resolution, and seeks to answer the question regarding the relative value of different types of neutral information.

In this paper, I present an alternative classification of normative information as neutral information for resolving disputes amicably. I defined four types of neutral information by distinguishing injunctive from descriptive information and information from the formal system from information from the informal system. I reviewed literature on social psychological studies of social norms and compliance and looked for evidence for the relative value of each of the types of neutral information. On this basis, I suggest that legislators, drafters of contracts, courts, and other so called norm-entrepreneurs consider investing more effort in creating and supplying descriptive information about the outcomes disputants actually obtain.

Number of Pages in PDF File: 14

Keywords: Objective Criteria, Dispute Resolution, Dispute System Design, Negotiations, Sources of Law

JEL Classification: D63, D74, K10, K40

working papers series