REACTIVE DEVALUATION AS A BARRIER AGAINST AMICABLE CONSTRUCTION DISPUTE SETTLEMENT

Abstract

Disputes are common in construction projects. Protracted unresolved dispute destroys contracting parties' desire to fulfil the project objectives. In this regard, promoting amicable and efficient construction project dispute resolution (CPDR) has been one of the key recommendations of almost every construction industry review. However, disputants' irrational behaviors would derail trajectory to settlement. Notable example of irrational decision is failing to seize settlement option that provides utility to both disputing parties. This can be the result of a deep-rooted psychological barrier called reactive devaluation (RD). RD describes the behavior of habitually devaluing the proposal raised by the counterpart. Disputants would reject a proposal irrespective of the quality and reasonableness of the proposal, just because it is raised by the counterpart. The occurrence of RD in CPDR would block proposal exchanges that are inevitable if a settlement is to be reached. This study aims to examine the application of RD in CPDR. Possible manifestations of RD in CPDR scenario were summarized and a conceptual framework of RD was proposed. Five types of RD were identified: reluctance to change, doubts about counterpart's ability, overconfidence, biased information processing, and mistrust of the counterpart. Furthermore, suggestions to alleviate RD were also discussed.