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Guthrie, C --- "Insights from Cognitive Psychology" [2005] LegEdDig 12; (2005) 13(3) Legal Education Digest 16

Insights from Cognitive Psychology

C Guthrie

[2005] LegEdDig 12; (2005) 13(3) Legal Education Digest 16

54 J Legal Educ 1, 2004, pp 42–48

The author’s goal in this paper is to explore cognitive psychology’s place in the dispute resolution field. Doing so involves first looking back and then looking forward. Looking back, the five insights from cognitive psychology are identified that have had the biggest impact on her own dispute resolution teaching and scholarship. Looking forward, her five hopes for the future of cognitive psychology in the dispute resolution field are identified.

Prospect theory includes four components, but two are of particular relevance to the dispute resolution community. The first of these is framing. When we make risky or uncertain decisions — like deciding whether to settle a case or to go forward to trial — we tend to perceive our decision options as either gains or losses from some neutral reference point, commonly the status quo. A second component of prospect theory that is highly relevant to dispute resolution is loss aversion. Loss aversion is applicable to dispute resolution in two ways. The first is concession aversion. When we make reciprocal concessions in a negotiation, we have a tendency to value those that we make more heavily than those we receive because we perceive our own concessions as losses but our counterpart’s concessions as gains. The second is the endowment effect. When negotiating over a good, we are likely to place a higher value on it if we own it than if we are trying to acquire it in the first instance. Both concession aversion and the endowment effect suggest that we are less likely to make trades than we might previously have imagined.

The basic idea of the so-called heuristics and biases program is that people tend to use heuristics or rules of thumb when making decisions. For the most part, these heuristics are adaptive and lead us to make good decisions. But the problem is that they sometimes cause cognitive illusions — akin to optical illusions in the visual world — that can lead our decision making astray. The problem, however, is that our estimates tend to be influenced by irrelevant and even absurd anchors.

Likewise, anchoring can have an impact in the dispute setting. There is evidence, for example, that a negotiator can use an extreme opening offer to anchor her opponent. Finally, researchers have conducted fascinating studies showing that plaintiffs’ requests for damages at trial can have a significant impact on what mock jurors deem to be appropriate damage awards.

The third item on the author’s list comes largely from the domain of social psychology rather than cognitive psychology. Each of these principles is relevant to dispute resolution; just a couple of them are used for purposes of illustration. First, consider the reciprocity rule. This is an apparently universal norm of behaviour that says when people do things for us, we feel obligated to repay them in kind. Second, consider both the authority principle and the liking principle. The former posits that we tend to defer to those whom we perceive to be authority figures, and the latter posits that we tend to defer to those we like. The fourth item may be less familiar. Hedonics, or hedonic psychology, is a branch of psychology, or a movement within psychology, which studies what brings us happiness or meaning in life. Hedonics researchers have demonstrated that we tend to be fairly bad at predicting what we want.

Researchers drawn largely from business schools have investigated how consumers evaluate complicated purchasing decisions. Among other things, they have found that consumers are influenced in predictable and apparently irrational ways when irrelevant options are added to a set of choices. One phenomenon that they have identified is contrast: the addition of an inferior option to a set of choices increases the likelihood that a consumer will be attracted to a superior similar option in the set. Another phenomenon researchers have identified is compromise or extremeness aversion: when an extreme option is added to a choice set, a consumer will be drawn to the option that has now become intermediate in the set.

These and other findings are relevant not only to consumer behaviour but also to dispute resolution. Those of us in the dispute resolution community have reason to pat ourselves on the back because we are more likely than many in the legal academy to have integrated some or all of these concepts into our teaching and research. First, the author would like to see us explore how lesser-known phenomena — like hedonic psychology, the ‘affect heuristic,’ and others — influence disputing. Second, with respect to those phenomena with which we are already acquainted, she hopes we develop a deeper understanding of the way they operate and interact with one another. Third, she would like to see us move from translation to creation, namely more original empirical work in law schools. Fourth, she hopes that we continue to create texts that are highly accessible to our students and to us as well. Finally, concluding on a positive note, she hopes we move beyond ‘barriers’. The barriers program has been fruitful in our field, but it has focused primarily on the negative impact these phenomena can have in disputes. Hopefully, more work can be done focusing on how these phenomena can be helpful, rather than harmful, to disputants, counsel and neutrals.

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