Among the factors contributing to the inability of environmental and econom
ic interest groups to resolve conflicts are the processes of social percept
ion and social decision making. This article identifies social psychologica
l dynamics that cause opposing parties to misunderstand each other's intere
sts and the facts presented to support them, thus hindering efficient confl
ict settlement. The authors review research elucidating the sources of thes
e problems and potential remedies. They discuss how such dynamics arise wit
hin the contexts of procedures for settling: environmental conflicts, gover
nmental adjudication procedures, and alternative free-market-based procedur
es. The conclusion is that purely market-based procedures avoid the obstacl
es most endemic to governmental adjudication but exacerbate other problems.
The authors conclude by analyzing emerging hybrid procedures that avoid th
e greatest obstacles associated with purely adjudicatory and purely market-
based procedures.