In most conflicts and disputes, money, land or other limited resources have to be distributed or shared. Ideally, this distribution is done in a way that is fair, transparent, and informed by the needs and capacities of the parties involved. Objective criteria (formulas, market prices, and sharing rules developed through social norms or case law) relevant to the particular legal problem at stake can help to guide distribution decisions. The use of objective criteria to settle disputes in the shadow of the law is sometimes called “principled negotiation.” Without it, negotiations can drag on or leave the parties involved feeling that they were not held to the same standard as everyone else.
Dividing the resource “pie” is an essential part of resolving differences between people. This is particularly true for conflicts and disputes involving parties who are in an ongoing relationship and must interact regularly. Household tasks should be shared between family members; salaries and rents have to be adjusted to changing circumstances. In case of divorce or the splitting up of a business, assets need to be divided. Distributive issues may also arise out of one-time transactions in which the rights of the parties involved are ambiguous or the relevant laws are abstract and difficult to apply. A personal injury claim has to be settled for a certain amount of money, for example, and a crime may be associated with a particular penalty.
In all of these disputes, sharing resources is necessary to reach a fair resolution. Doing so based on objective criteria increases outcome acceptance, reduces decision regret, and makes it easier for disputants to explain the outcome to others.
A number of behavioural factors can get in the way of distributing money, assets, tasks, and risks in a fair way. First and foremost is disputants’ instinct to negotiate strategically in order to obtain the biggest slice of the pie. Tactics like making extreme offers, committing to making no further offers, or hiding information from the other party can cause parties to forgo or fail to reach a solution. These barriers can result in bargaining failure: a scenario in which both parties to the dispute are better off by making a deal or reaching a settlement but are unable to agree.
Obtaining information about fair ways of sharing money, assets, tasks, and risks can be costly for individual disputants. This information can be shared and made available to people through the formal legal system, but the inaccessibility of courts and lawyers means that few people around the world will be able to access it. The reality that sharing rules may vary by location, the type of dispute, or the particular distributive issue at hand also makes it difficult for parties to ascertain the precise information they need and access it at a low cost.