Present Bias off the Bench to Bat Clean-Up at Mediation Stadium
Updated: Sep 24, 2020
TOMORROW IS PROMISED TO NO ONE.
2003. Another philosophical discussion at work.
Which happens when procrastinating.
Mission: Coffee. Office laps. Find slackers.
RELIEF! I find a colleague to indulge my sloth.
Not procrastination. DISCUSSION! COLLABORATION!
Procrastinate in style! No fantasy picks, or office gossip.
We ponder big questions.
She pops out this gem: TOMORROW IS PROMISED TO NO ONE.
WHAT?? Who needs existential anxiety? I have work to do! I mumble an excuse, run out and join the guys for fantasy picks.
2020. OMG. That conversation 17 years ago.
She was right. TOMORROW IS PROMISED TO NO ONE.
I’ve seen this before. After 9/11. Cases settled. TOMORROW IS PROMISED TO NO ONE.
2020. Mediation--the only game in town.
OMG. THE PRESENT BIAS! Always warming the bench while flashier biases batted clean-up.
It’s 2020. Mediation is the new stadium. PRESENT BIAS, YOU’RE AT BAT!
Like 2003! AARON BOONE! TOMORROW IS PROMISED TO NO ONE!
PRESENT BIAS: Hit that walk-off homerun.
I miss baseball. The Yankees. The packed 4 train. Wearing my old Tino Martinez jersey. Beers at Stan’s and fries at the game. Giving high fives to strangers. My Yankee hat. A mask, my large sunglasses, and a hat feel a bit too “witness protection chic” for me, so I leave the hat at home. Not that I leave home much. I miss going to Fenway and getting heckled.
More than six months into 2020, Major League Baseball suddenly has a lot in common with the legal community. As MLB finds a way to play ball, the legal community grapples with how to conduct jury trials. Baseball workarounds are easier, there’s more leeway at the stadium than the courthouse, just forget the fans. The same cannot be said about jurors.
We have tried virtual trials using online platforms, in-person trials with social distancing, masks, and other virus protection measures, as well as various hybrid approaches. One thing is certain, as we suspected there are no easy answers. Or are there? Mediation has taken on an even greater role in our socially distant, “do everything virtually” environment. It lacks the drama, glamour, and general excitement of a major league trial, but in some ways it is better. It is the gritty, dependable bench warmer often overlooked in the flash and cash era of big trials, and bigger verdicts. It is more efficient, convenient, and less expensive than the diva trial. It offers finality. It doesn’t need any special accommodations, just a WiFi connection. Mediation is certainly not the panacea for all matters, and criminal defense cases raise a whole host of constitutional issues. However, as baseball works its way through 2020, litigants involved in civil disputes thought impossible to settle in 2019, are now checking their Wifi connections and giving mediation serious consideration.
Social Psychology and Mediation
When we talk about social psychology in the litigation arena, there is so much focus on the actual trial and much less attention given to the settlement process. Accordingly, with mediation clinching a secure position in 2020’s dispute resolution starting line-up, it is imperative to understand social psychology’s role, including some of the more salient cognitive biases.
The cognitive bias is a mental shortcut used in human decision making. Cognitive biases are neither logical nor rational and are based on an intuitive style of thinking, rather than deliberative. They emanate from an individual’s tendency to organize its social world by categorizing. Simply stated, cognitive biases are the brain’s way of making sense of a chaotic world. Cognitive biases can be found from the inception of a case through trial or settlement. “Anchoring” and “Adjustment” are two of the most prevalent cognitive biases found in the settlement arena.
Anchoring and Adjustment
Anchoring is a cognitive bias where an individual depends too heavily on an initial piece of information offered (considered to be the "anchor") to make subsequent judgments during decision making. Once the value of this anchor is set, all future negotiations, arguments, estimates, etc. are discussed in relation to the anchor. Incremental adjustments are based on additional information. These adjustments are usually insufficient, giving the initial anchor a great deal of influence over future assessments. Information that aligns with the anchor tends to be assimilated toward it, while information that is more dissonant or less related tends to be displaced. This bias occurs when interpreting future information using this anchor. [i]
Psychologists Daniel Kahneman and Amos Tversky are credited for their discovery and subsequent research studies involving anchoring and adjustment. In their classic paper, Tversky and Kahneman (1974) showed that people’s judgments could be systematically skewed by providing them with an arbitrary number before their judgment: The experimenter generated a random number by spinning a wheel of fortune, and then asked participants to judge whether the percentage of African countries in the United Nations was smaller or larger than that number. Participants were then asked to estimate this unknown quantity. Strikingly, the participants’ estimates were biased towards the random number: their median estimate was larger when the random number was high than when it was low. This appears to be a clear violation of rationality. According to Tversky and Kahneman, in the first stage, people generate a preliminary judgment called their anchor. In the second stage, they adjust that judgment to incorporate additional information, but the adjustment is usually insufficient. In Tversky and Kahneman’s experiment people appear to have anchored on the random number provided by the experimenter and adjusted it insufficiently. Consequently, when the anchor was low people’s judgments were too low, and when the anchor was high their judgments were too high. [ii]
Although the anchoring and adjustment biases are difficult to overcome there have been strategies offered by psychologists on how to mitigate their effects. The first step (as with all cognitive biases) is awareness. Second, slow the decision-making process, and third, drop your own anchor. [iii] In the context of a mediation, the process may look like the following from the defense perspective after the plaintiff drops the anchor by making an initial settlement demand:
1) Refute the anchor: “I think we may be looking at damages very differently. You are factoring in a future component, and we believe this is a case strictly about past costs,” or “I think we are looking at liability very differently.”
2) Offer data as to why the anchor is incorrect, and ask clarifying questions, probing for more information to move the attention from the anchor.
3) Set your own data-backed anchor.
By using this strategy, it will mitigate the “midpoint” problem, which happens when an offer is immediately proffered in response to the initial demand without any backup data for the number. This type of immediate counteroffer creates a range, so if the demand is $20M and the counteroffer is an immediate $1M, the midpoint then becomes $10M. The $20M must be refuted in order to circumvent the psychological bracketing.
The Present Bias
Mediation is the sturdy, reliable, alternative dispute resolution process grabbing the spotlight in 2020. Similarly, there is a less well-known cognitive bias who has entered the mediation stadium this year. While anchoring and adjustment are still in the starting line-up, in our pandemic world, the “Present bias” emerges as the humble and powerful clean-up hitter. The present bias is the tendency to settle for a smaller present reward rather than wait for a larger future reward, in a trade-off situation. It describes the trend of overvaluing immediate rewards, while putting less worth in long-term consequences.[iv]
“In late June, Bayer AG agreed to pay $9.5 billion to settle about 100,000 lawsuits that accused Roundup, the popular herbicide it acquired when it bought Monsanto in 2018, of causing non-Hodgkin lymphoma. The settlement came about even though Bayer adamantly insists that glyphosate, the core chemical in Roundup, is not a cancer agent, a position also taken by the Environmental Protection Agency and other regulators around the world. It also came about after the plaintiffs won the first three cases that went to trial, including one last year in which a jury awarded $2 billion to a California couple. The plaintiffs’ lawyers had hoped to leverage those victories to extract $20 billion or even $30 billion from Bayer to settle the litigation. The settlement came about even though we’re in the middle of a pandemic. Or perhaps it’s more accurate to say that it came about because we’re in the middle of a pandemic. ‘There were no juries and no trials,’ said Ken Feinberg, who, as the court-appointed special master, was assigned the task of trying to resolve the litigation. You see, without trials, there wasn’t much else either side could do besides settle.” [v]
In 2020 where dockets are full and moving slowly, where the economy is in shambles, where litigants have seen the impossible become reality, and realize “TOMORROW IS PROMISED TO NO ONE” will the present bias be in the mediation stadium to hit the walk-off home run? Ask Aaron Boone.
[i] https://en.wikipedia.org/wiki/Anchoring_(cognitive_bias) [ii] http://cocosci.princeton.edu/papers/AnchoringSimulations.pdf [iii] https://www.psychologytoday.com/us/blog/stretching-theory/201902/outsmart-the-anchoring-bias-in-three-simple-steps [iv] https://en.wikipedia.org/wiki/Present_bias [v] https://www.bloomberg.com/opinion/articles/2020-07-06/it-took-a-covid-19-pandemic-to-settle-bayer-s-roundup-suits