Shuttle diplomacy

In practice mediation operates through shuttle diplomacy: the mediator goes back and forth between parties, meeting them in private. We model shuttle diplomacy as a dynamic procedure. The mediator helps each party to gradually discover (privately) her value from settlement and re-assess her bargaining position, while also proposing the terms of the deal. We show that shuttle diplomacy always allows parties to achieve an ex-post efficient final settlement. In contrast, this is not possible with a static mediation procedure. In addition, if parties have symmetric prior value distributions, shuttle diplomacy guarantees a fair split of the social value from settlement.