“Reactive devaluation” is a cognitive bias that occurs when a proposal is devalued because it comes from an adversary. Applied to mediation, it is not uncommon for a party to reject a proposal made by the opposing party for no apparent reason other than it came from the opposing party. When the proposal is made by the mediator, however, reactive devaluation is significantly reduced. Thus, a party might agree to a proposal made by the mediator, even though it would not have agreed to that proposal if it had come from the opposing party.

A mediator’s proposal is typically used as a last resort after all other attempts to avoid impasse have failed. It is a one-time, “take-it-or-leave it” dollar amount that the mediator suggests at the end of the mediation process. If both parties accept, the case settles for the proposed amount. If one party accepts and the other rejects, or if both parties reject, there is no settlement. In this commentary I will assume there are only two parties and one dispute involved in the mediation.