Unveiling Cognitive Biases in Construction Project Dispute Resolution through the Lenses of Third-Party Neutrals

Cognitive biases would jeopardize the quality of decisions, yet people are reluctant to admit to being affected. This study explores the types of cognitive bias that may have influences on construction project dispute resolution (CPDR) decisions. Effects of cognitive biases are first operationalized as biased behaviors. Third-party neutrals, including arbitrators, adjudicators, and mediators, were asked to report their observations of disputing parties' biased practices. The use of third-party neutrals aims to improve the objectivity of the data on disputing parties' biased behaviors. Principal component factor analysis (PCFA) on the collected responses suggested four types of cognitive bias: preconception, self-affirmation, optimism, and interest-oriented biases. Among these, interest-oriented bias was found to be the most prominent. This study contributes to CPDR management by proposing bias-minimizing measures. Fuzzy-set linguistic evaluations were employed to assess the usefulness of the measures in view of the nondiscrete nature of the assessments. The findings were further validated through semistructured interviews with experienced dispute management experts. The contributions of the study include: (1) raising the awareness of the potential types of cognitive bias that would affect decisions in CPDR, (2) enhancing the role of third-party neutrals in directing disputing parties away from influences of biases, (3) reminding disputing parties not to undervalue the proposals of the counterparts, and (4) improving dispute management by suggesting a review of all options available at each round of dispute negotiation. Having experienced third-party neutrals as respondents is also a major breakthrough in the study of behaviors of disputing parties. The findings are invaluable to construction professional communities in general and to disputing parties and third-party neutrals in particular.