Fair Divorce Settlements: The Win–Win

Lawyer (Divorce Settlements)

Solution

Conrad Hilton was very generous to me in the divorce settlement. He gave me 5,000 Gideon Bibles.

Zsa Zsa Gabor

‘It’s nice to share, Dad,’ our three-year old son once remarked as he looked at my ice cream after finishing his own. But sharing is not so simple. If you need to divide something between two or more people what should you aim to do? It is easy to think that all you need is to make a division that you think is fair, and for two people this means dividing the asset in half. Unfortunately, although this might work when dividing something that is very simple, like a sum of money, it is not an obvious strategy when the asset to be shared means different things to different people. If we need to divide an area of land between two countries then each might prize something, like water for agriculture or mountains for tourism, differently. Alternatively, the things being divided might involve undesirables – like household chores or queuing.

In the case of a divorce settlement there are many things that might be shared, but each person places a different value on the different parts. One might prize the house most, the other the collection of paintings or the pet dog. Although you, as a possible mediator, have a single view of the value of the different items to be shared, the two parties ascribe different values to the parts of the whole estate. The aim of a mediator must be to arrive at a division that both side are happy with. That need not mean that the halves are ‘equal’ in any simple numerical sense.

Husband and wife at lawyer office.

A simple and traditional way to proceed is to ask one partner to specify a division of assets into two parts and then allow the other partner to choose which of the two parts they want. There is an incentive for the person who specifies the division to be scrupulously fair because they may be on the receiving end of any unfairness if their partner chooses the ‘better’ piece. This method should avoid any envy persisting about the division process (unless the divider knows something about the assets that the other doesn’t – for example, that there are oil reserves under one area of the land). Still, there is a potential problem. The two partners may still value the different parts differently so what seems better for one may not seem so from the other’s point of view.

Steven Brams, Michael Jones and Christian Klamler have suggested a better way to divide the spoils between two parties that both feel is fair. Each party is asked to tell the arbiter how they would divide the assets equally. If they both make an identical choice then there is no problem and they immediately agree what to do. If they don’t agree, then the arbiter has to intervene.

_________A_____B_________________

Suppose the assets are put along a line and my choice of a fair division divides the line at A but your choice divides it at B. The fair division then gives me the part to the left of A and gives you the part to the right of B. In between, there is a left-over portion, which the arbiter divides in half and then gives one part to each of us. In this process we have both ended up with more than the ‘half’ we expected. Both are happy.

Lawyer discussing their problems

We could do a bit better perhaps than Brams and Co. suggest by not having the arbiter simply divide the remainder in half. We could repeat the whole fair division process on that piece, each choosing where we thought it is equally divided, taking our two non-overlapping pieces so that a (now smaller) piece remains, then divide that, and so on, until we are left with a last piece that (by prior agreement) is negligibly small, or until the choices of how to divide the remnant made by each of us become the same. If there are three or more parties wishing to share the proceeds fairly then the process becomes much more complicated but is in essence the same. The solutions to these problems have been patented by New York University so that they can be employed commercially in cases where disputes have to be resolved and a fair division of assets arrived at. Applications have ranged from the US divorce courts to the Middle East peace process

Also Read: - How to Push a Car?

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