Guaranteed Collaborative Outcome
In case of no agreement at the end of Final Session, Smartsettle negotiators may choose the assistance on an Expert Neutral (individual or panel) to close the deal for them. This unique and face-saving way of guaranteeing a deal also encourages early fair concessions. This method is called Expert Neutral Deal-closer (END). We have agreed with our users objecting to the earlier name “Dampened Pendulum Arbitration”. Arbitration gives the wrong impression because this is still a voluntary part of the process. However, like Pendulum Arbitration (also called Final Offer Arbitration), END also rewards fairness but it does so without identifying a clear loser. In so doing it maintains a good atmosphere for continued harmonious relationships.
How it Works
If parties agree to the intervention of an Expert Neutral and no agreement is reached at the end of Final Session, Smartsettle uses the opinion of an Expert Neutral to favor the party whose last accepted value was closest to fair. The following illustration applies directly to a Smartsettle One+ negotiation but the same principles apply to Smartsettle Infinity.
Suppose that Party A and Party B make visible proposals of 49 and 60 respectively and both parties are willing to accept an outcome between those values. Party A makes a secret acceptance of 51 and Party B makes a secret acceptance of 57. Neither party is willing to make any further concessions and Final Session ends as shown below.
The Expert Neutral is shown a range of values that cover the two last accepted values and extends an equal distance beyond each of the hidden accepted values to include the nearest visible proposal. In this case, the range of values shown to the Neutral is as follows:
49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59
The Neutral is not aware what the secret acceptances or visible proposals are. All s/he knows is that the range includes at least one of the visible proposals and that the secret acceptance range is centered on the total range. The Neutral is instructed to choose one of these values that is the closest to fair in her expert opinion. Note: In practice, Smartsettle uses more than one Expert Neutral to determine fair. So “fair” may be the middle value of three. If the gap is very small, then Smartsettle itself will act as the Expert Neutral.
In this case, suppose that the Neutral identifies 55 as Fair.
If the value chosen by the Neutral falls between the accepted values, the party who is closest to fair is favored by selecting the median between fair and their last accepted value. Tie goes to whoever moved first and rounding is in favor of the party closest to fair. If the value identified by the Neutral falls outside the accepted values, then that value becomes the outcome.
In this example, Fair falls between the accepted values and the final binding award is declared by Smartsettle to be 56.
Party A might suspect that Party B was favored in this case but s/he can’t tell for sure. Party B has no clue who was favoured.
Combined with Visual Blind Bidding, the Expert Neutral Deal-closer provides the best of both worlds. It encourages fair compromises early in the process, thus minimizing the actual need for intervention, and it does this all without identifying a clear loser.