The Prisoner’s Dilemma
In personal injury mediation, negotiation quickly becomes all about distributive bargaining: how much is one party willing to give and the other party willing to take, methodically approached by incremental tit-for-tat offers. Each party always keeping a keen eye on their bottom line throughout the process. But is this the best way to maximize value and achieve a successful settlement resolution?
The Prisoner’s Dilemma is a paradigm for situations in which neither party wants to cooperate, yet both parties would benefit if they did. The classic illustration, seen countless times on TV cop shows, goes like this: two partners in crime are arrested and put into separate interrogation rooms. The Prosecutor offers them both a deal: the first one to confess and testify against their partner will go free while their partner gets a life sentence. If neither of them confesses against the other, they will both get one year on a lessor charge. If they both confess, they will both get ten years. The following illustration shows the choices and their possible consequences:
Take a minute and think about what you would do. Would you confess or keep quiet? If you analyze your options, you quickly realize that the only way to avoid being exploited by your partner, and possibly serving a life sentence, is by confessing. Only by being competitive do you stand a chance at going free (if your partner keeps quiet) but at the risk of a ten-year sentence if your partner confesses too. Is this your best option? What if you could talk to your partner and cooperate in a strategy before giving the Prosecutor your answer? Would that make a difference? If you both honored your cooperative agreement, you’d both likely keep quiet and only serve one year.
What lesson can we take away from The Prisoner’s Dilemma and apply to personal injury mediation? Look for opportunities to shift the negotiation paradigm from a competitive, distributive bargaining model to one of cooperation and integrative bargaining. How do you do this?
- Look for and Acknowledge Common Ground. For example, if the plaintiff is asserting multiple injuries from an accident and the defense are able to acknowledge that certain injuries appear to have been caused by the accident, say so! The defense is offering money at mediation for a reason, instead of just arguing the defenses that justify a low offer, acknowledge the injuries that are reasonably related, which justifies the substantial money the defense is putting on the table.
- Avoid Tit-for-Tat. If the parties get caught up in a dollar-for-dollar, Tit-for-Tat, negotiation model, it takes away each party’s ability to create cooperation and value through creative integrative bargaining. Just because the defense makes a slight concession doesn’t meant that the plaintiff is prevented from making a more generous gesture. You’d be surprised how well this can be received and reciprocated, which moves the negotiation into a cooperative value building model.
- Think Outside the Box. At the end of the day, every personal injury settlement comes down to money, but the process of getting there is critically important. Value can come in surprising ways if you don’t limit your thinking or your ability to listen to and understand the other party’s positions and interests. I was involved in a personal injury slip & fall case where the defendant was a home improvement chain. The plaintiff was in the business of buying and flipping properties. At mediation, the defendant offered a sizeable gift card as part of settlement in an effort to close the gap. The plaintiff was thrilled with this idea and the case was settled.
It is so easy to get stuck in our boxes of pre-conceived notions, expectations, and habits, and force settlement negotiations into the comfortable and familiar competitive/distributive bargaining model. It’s the easy answer to The Prisoner’s Dilemma. These boxes have become such an innate part of our thinking that we don’t even see the boxes any more. Take this puzzle as an example: without lifting your pen from the paper once you start, or retracing any lines, connect all of the dots by drawing only four straight lines:
Developing a creative strategy for avoiding exploitation while at the same time allowing room for cooperative bargaining is the key to maximizing settlement opportunities in mediation. The more you develop an ability to think outside the box, the more successful you will be faced with The Prisoner’s Dilemma. (Which is a hint to solving the puzzle; No one said you had to keep the lines within the confines of the dots.)