Never Say No: The Law, Economics, and Psychology of Counteroffers

It is such an honor to speak to you, especially since compared to the titans who have given the Schwartz Lecture in the past, I feel like an ADR manqué. I am going to proceed, nonetheless, and discuss the impact of counteroffers on negotiation. And I am going to try to convince you of four central claims: - Legal claim: The counteroffer is governed by what I will call the "blow-up rule," which is a rare kind of double-jointed default. - Informational claim: Offerees are the first people to know when there are gains of trade. - Channeling claim: The blow-up rule dampens the incentive of offerees to inefficiently counter. - Psychological claim: Rejection aversion and other behavioral "biases" tend to cause people to reject offers too often. These counteroffer claims join together two disparate obsessions that I have with legal default rules and information forcing. The last claim even gives me a chance to indulge my penchant for why-not experimentation, where I have tried to put into practice the never-say-no attitude.