Second Learning Motivator - Dispute Resolution

January 27, 1997

Please show your work clearly in the space provided. Illegible writing will be marked incorrect. If you use the back of a page, indicate that you have done so on the front of the page. Good Luck!

1) Briefly define each of the following terms [4 points each]:

negative-sum game


objective criteria


Section 1988


offer of settlement rule (e.g., Rule 68)


ultimatum bargaining


judgmental heuristics


last-best-offer arbitration




smoke-out effect



2) [9] What are the three basic points to remember when negotiating with objective criteria?:




Circle the one best answer to each multiple choice question below [4 points each].

3) According to the famous Rand study of asbestos litigation, claimants netted how many cents of every dollar spent by both sides, the remainder going to litigation costs.

a. 81.

b. 73.

c. 69.

d. 51.

e. 37.

4) If you are the divider in an ultimatum bargaining game and both sides are rational profit maximizers, what percent of the asset in question would you propose that you receive?

a. 0

b. 1

c. 50

d. 99

e. 100

5) Dean Ward suggested that in negotiations you should try to get the other side to

a. take a walk outside.

b. give you a hug.

c. talk a lot.

d. sleep on it.

e. none of the above.

6) In Dr. Dave’s experience, bargaining with Japanese individuals and bargaining with one’s family over who will pay the check are similar in that

a. both lead to unfortunate results.

b. both involve bargaining against the most profitable short-run outcome for you.

c. both should be avoided.

d. both involve attempts to make the other party worse off in the short run.

e. none of the above.

7) According to Rowe and Anderson, the adoption of a fee-shifting Rule 68 available to plaintiffs and defendants would

a. have a strong effect on the settlement rate.

b. probably not effect the timing of offers at all.

c. be far better than the adoption of the Sincerity Rule.

d. facilitate a notable increase in the settlement rate.

e. have a weak effect on the settlement rate and a beneficial effect on the timing of offers.

8) The process economists use to determine how one variable is influenced by others based on empirical data is called

a. voodoo economics

b. quantitative data transfer

c. superstatic interference modeling.

d. regression analysis.

e. mathematical coupling.


9) [4 points] What did Dean Ward say was a problem with the way some courses are taught, and why is it a problem?





10) [6 points] What should the union organizers have done differently in their negotiations with Hormel?





11) [8 points] Consider the following payoff matrix for countries A and B:

B’s Military Expenditure


Spend 0

Spend X

A’s Military

Spend 0






Spend X






Does A have a dominant strategy? If so, what is it?

Does B have a dominant strategy? If so, what is it?

Explain the particular Prisoner’s Dilemma that’s behind Orley Ashenfelter’s explanation of excessive use of lawyers.





12) [12 points] Suppose you are on the executive committee of a company that just opened a second plant. The new plant has much nicer facilities, including a gym and spa not available in the first plant. Workers are grumbling because they fear having to work at the old plant while other workers get to work at the new plant and take advantage of its superior offerings. You have been assigned the task of working with the employees to temper their discontent. Explain how you would apply the recommendations of chapters 3, 4, and 5 of Getting to Yes in this situation. For example, brainstorm and come up with a list of potential ways to handle the situation. (If you cover the three topics of these three chapters in the wrong order, there will be no deduction.)

a. How would you evaluate and address the topic of chapter 3?










b. Chapter 4?











c. Chapter 5?