We are willing to compromise because most of us intuitively seek certainty over uncertainty. In litigation, especially in complex business disputes, outcomes are notoriously uncertain and unpredictable.
The variables that determine litigated outcomes are mostly outside the current control of the disputing parties: the situation in which they all find themselves; the law; venue; judge; jury; the facts; witnesses, especially adverse witnesses; undisclosed biases of all the actors in the dispute; and more. Only compromise or surrender yield certainty before litigation is finally decided.
One simple example illustrates our intuitive search for certainty:
Which do you prefer?
A. Toss a coin. If it comes up heads you win $100, and if it comes up tails you win nothing.
B. Get $46 for sure.
Most people pick “B”, the sure thing, in most situations. Kahneman, Thinking, Fast and Slow, 271 (Farrer, Straus & Giroux 2011).
However, when we are faced with only very bad options, we are willing to take far greater risk and forego the sure thing in favor of “taking our chances.” We will be predisposed to accept risk over certainty. Also, in those poor circumstances, we are less willing to compromise on a rational result under all the circumstances. Kahneman posits the following hypothetical:
Person A possesses 1 million widgets; Person B 4 million widgets. Both are offered a choice between a gamble and a sure thing.
Gamble: equal chances to end up with 1 million or 4 million widgets.
Sure thing: end up with 2 million widgets.
A and B are “likely to make different choices because the sure-thing option of owning 2 million makes [A] happy and [B] miserable. Note how the sure outcome differs from the worst outcome of the gamble: for [A], it is the difference between doubling his wealth and gaining nothing; for [B], it is the difference between losing half her wealth and losing three-quarters of it.” Kahneman, 276. In a negotiation, B will find a reasonable settlement (for instance, 2.5 million) a difficult pill to swallow.
In mediation, the mediator tries to understand and appreciate the perspective from which the parties approach compromise. It takes time, patience and perseverance to help the parties analyze and accept the situation in which they find themselves: in a dispute, with bad options, with very little in their control and a predisposition to take a risk on a worse result than on certainty. When everyone understands, the parties will be willing to consider a reasonable compromise.