Abstract
Do divorcing couples improve their chances of securing an integrative (win-win) divorce agreement when employing lawyers? Despite the pervasiveness of legal representation in divorce, divorce bargaining is typically modelled as two-person games between principals only. The potential for agency-related problems suggests that this is a critical omission. This thesis introduces a novel model, the Integrative Divorce Bargaining Game (IDBG), a game played between ‘lawyers’ on behalf of their respective ‘clients’, to address this lacuna. The IDBG offers a framework to address the question does agency facilitate or hinder integrative (welfare-maximising) divorce agreements? The model focuses on the integrative (value-creation) process because divorce is rarely a zero-sum game (Gilson and Mnookin, 1994). Instead, because divorce is typically characterised by multiple issues, joint gains can be created through trade (e.g. Maccoby and Mnookin, 1992) to the extent that the spouses’ interests are not diametrically opposed. The formulation of the IDBG is based on the Centipede Game (Rosenthal, 1981) which encapsulates the integrative tension in non-zero-sum bargaining. Specifically, cooperative moves to create value can generate joint gains yet unilateral (competitive) moves to claim value can reap a larger distributive share of an existing ‘bargaining pie’. The IDBG treatment here is novel because it is the first to incorporate the principal-agent problem into the Centipede Game. Comparative statics analysis of a formal model incorporating lawyers’ reputational capital, hourly fee compensation-structure, and the prospect of trials predicts overinvestment with respect to the divorcee welfare maximising integrative outcome. Results corroborate the systematic settlement delays and high rate of last minute settlements (courthouse steps phenomenon) observed in practice (McMullen and Oswald, 2010; Sullivan, 2016; Ministry of Justice, 2021). The associated evolutionary ramifications on the divorce market are discussed.Experiments using (divorce) bargaining games often fail to incorporate agency-related problems that characterise divorce. This gap is addressed with a comparative experimental investigation of the IDBG that explores the effects of agency on integrative divorce bargaining. A novel experimental design compares agency-led and pro se (self-represented) games to investigate differences in divorcee welfare, incidence of integrative outcomes and deviations therefrom. Results present two key contributions to the literature. Firstly, contrary to prior literature, most pro se players adhered to game-theoretic predictions of the Centipede Game by choosing to terminate at their first decision-node (e.g. McKelvey and Palfrey, 1992; Parco, Rapoport and Stein, 2002; Georgalos, 2020). The IDBG’s unique divorce narrative offers a plausible explanation. Indeed, promoted by popular media, common preconceptions of divorce as contentious may make cooperative bargaining moves (passing in the Centipede Game) less likely. In comparison, agency increased divorcee welfare, yet also increased the likelihood for overinvestment, defined as termination past the divorcee welfare maximising integrative outcome. Hiring agents to manage integrative divorce may, therefore, constitute a dilemma. Nonetheless, a second key contribution to the literature is the agents’ deviation from rational models of profit-maximisation, which assume that players are only invested in their economic self-interest (Fehr and Fischbacher, 2004). Instead, gameplay indicates that the payoff of a respective client contributes to the agent’s utility function as a product of other-regarding preferences. Still, results suggest systematic deviations from the integrative outcome. This thesis discusses the associated social welfare implications and calls for the development of mechanisms to remedy effort levels in integrative divorce.
Chapter 6 investigates whether persuasive normative messages (PNMs) can enhance divorcee welfare in integrative divorce bargaining. The use of PNMs is inspired by a structural characteristic of divorce-practice, the prevalence of local professional communities who, through repeated interaction, develop unique norms of practice (e.g. Mather et al., 2001; Mather and McEwen, 2012). By leveraging local community norms, PNMs may offer local policy-makers a timely, cost-effective and pertinent tool to improve effort levels in integrative divorce bargaining. Experimental results demonstrate that the PNM increased joint divorcee welfare (payoffs) and the incidence of integrative agreements among pro se players in the IDBG. In agency-led games, the PNM increased the incidence of integrative outcomes, and decreased overinvestment in most experimental sessions, despite asymmetric information and misaligned incentives. The social proof heuristic (Cialdini, 1993) and a (temporary) influence on other-regarding preferences, brought on by social norms, offer plausible explanations. Results signify that policy-makers can utilise PNMs to enhance divorcee welfare, curb settlement delays and reduce the number of appeals that arise from deviations from the integrative (envy-free) outcome. In practice, local authorities should subsidise and leverage platforms dedicated to pro se divorcees (e.g. seminars) to frame divorce as cooperative. PNMs should complement such interventions to enhance the normative appropriateness of cooperative behaviour and this can be made persuasive by emphasising its merits (i.e. increased welfare). Regarding divorce lawyers, policy-makers should collaborate with local communities to shape norms of practice (i.e. pursuit of integrative agreements, avoidance of purposeful delays) and importantly, advertise and endorse community values to potential clientele. This can give rise to an effective and easily comprehensible signalling device which can make deviations from community values personally costly. PNMs should leverage signalling theory and the rising threat of pro se representation, to underline the professional interest in preserving community norms. Congruent with Kölle et al., (2020), emphasising negative incentives (i.e. foregoing higher rent) can strengthen perceptions of normative appropriateness. Overall, this research project offers solutions for policy-makers who concern themselves with the social welfare costs that arise from suboptimal effort in integrative divorce bargaining.
| Date of Award | 4 Dec 2023 |
|---|---|
| Original language | English |
| Awarding Institution |
|
| Supervisor | Joanna Syrda (Supervisor) & Tim Wakeley (Supervisor) |