Does Resorting to Online Dispute Resolution Promote Agreements? Experimental Evidence

32 Pages Posted: 30 Mar 2006 Last revised: 2 Jun 2014

See all articles by Yannick Gabuthy

Yannick Gabuthy

National Center for Scientific Research (CNRS), Bureau of Economic Theory and Application (BETA), University Nancy 2

Nicolas Jacquemet

Paris School of Economics (PSE); Université Paris I Panthéon-Sorbonne

Nadege Marchand

Groupe d' Analyse et de Theorie Economique (GATE)

Date Written: 2008

Abstract

This paper presents an experiment performed to test the properties of an innovative bargaining mechanism (called automated negotiation) used to resolve disputes arising from Internet-based transactions. The main result shows that the settlement rule tends to chill bargaining as it creates incentives for individuals to misrepresent their true valuations, which implies that automated negotiation is not able to promote agreements. However, this perverse effect depends strongly on the conflict situation. When the threat that a disagreement occurs is more credible, the strategic effect is reduced since defendants are more interested in maximizing the efficiency of a settlement than their own expected profit. The implications of these results are then used to discuss the potential role of public regulation and reputation mechanisms in Cyberspace.

Keywords: Online Dispute Resolution, Electronic Commerce, Bargaining, Arbitration, Experimental Economics

JEL Classification: C78, C91, D74, K41

Suggested Citation

Gabuthy, Yannick and Jacquemet, Nicolas and Marchand, Nadege, Does Resorting to Online Dispute Resolution Promote Agreements? Experimental Evidence (2008). European Economic Review, Vol. 52, No. 2, 2008. Available at SSRN: https://ssrn.com/abstract=891100

Yannick Gabuthy (Contact Author)

National Center for Scientific Research (CNRS), Bureau of Economic Theory and Application (BETA), University Nancy 2 ( email )

13 place Carnot C.O. n° 26
Nancy, F-54035
France
33 0 3 83 19 26 04 (Phone)

HOME PAGE: http://cournot2.u-strasbg.fr/users/beta/pagesperso/affinfos.php?id=222

Nicolas Jacquemet

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Université Paris I Panthéon-Sorbonne ( email )

17, rue de la Sorbonne
Paris, 75005
France

HOME PAGE: http://www.nicolasjacquemet.com/

Nadege Marchand

Groupe d' Analyse et de Theorie Economique (GATE) ( email )

CNRS UMR 5824
93, chemin des Mouilles - B.P.167
69130 Ecully cedex
France

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