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 article 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 to make a concession because their opponent has high resolve and will fight. An unbiased mediator who is simply interested in minimizing the probability of conflict 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 mediators who are effectively “on your side” will be believed if they counsel restraint.