Abstract. We compare three common dispute resolution processes -negotiation, mediation, and arbitration -in the framework of Crawford and Sobel (1982). Under negotiation, the two parties engage in (possibly arbitrarily long) face-to-face cheap talk. Under mediation, the parties communicate with a neutral third party who makes a non-binding recommendation. Under arbitration, the two parties commit to conform to the third party recommendation. We characterize and compare the optimal mediation and arbitration procedures. Both mediators and arbitrators should optimally filter information, but mediators should also add noise to it. We find that unmediated negotiation performs as well as mediation if and only if the degree of conflict between the parties is low.

We analyze the performance of various communication protocols in a generalization of the Crawford-Sobel (1982) model of cheap talk that allows for multiple receivers. We find that whenever the sender can communicate informatively with both receivers by sending private messages, she can communicate informatively by sending public messages. In particular, it is possible that informative communication with one or both receivers is impossible in private, but possible in public. When the sender is allowed to send both public and private messages, it is possible for the sender to combine the commitment provided by public communication with the flexibility provided by private communication and transmit more information to the receivers than under either private or public communication scenarios. When the players can communicate through a mediator and the receivers are biased in the same direction, it is optimal for the sender to communicate with the receivers through independent private noisy communication channels. It is in general optimal to take advantage of pooling the sender's truthtelling constraints across the receivers when they are biased in the opposite directions.

Abstract. Workers competing in a tournament for a given prize, say a promotion, often perform sequentially in multiple stages. When the …rm is privately informed about the workers'performance, it can sharpen incentives by strategically disclosing the intermediate results. But the policies that enhance …nal-stage e¤ort may dampen incentives at the intermediate stage. In our model, the optimal disclosure policy has a simple form: disclose only if all workers perform poorly. This result o¤ers a novel justi…cation for partial disclosure in performance feedback. Also, it is in contrast with the existing literature that focuses on the extreme policies of 'full disclosure'and 'no disclosure.'

This article examines the optimal contract in a bilateral trade model with unobservable relationship-specific investment and renegotiation. In such a setting, a contract plays an additional role that it does not have in the standard holdup model, namely that of transmitting information between the parties. The article shows that a partial-disclosure contract may be optimal and describes the optimal contract. If the investment is cooperative and the information between the trading parties is asymmetric, the optimal contract generally cannot result in the first best, but dispensing with either of these assumptions makes the first-best achievable.

Abstract. We study communication in a static Cournot duopoly model under the assumption that the firms have unverifiable private information about their costs.We show that cheap talk between the firms cannot transmit any information. However, if the firms can communicate through a third party, communication can be informative even when it is not substantiated by any commitment or costly actions.We exhibit a simple mechanism that ensures informative communication and interim Pareto dominates the uninformative equilibrium for the firms.