In his blog, The Frontal Cortex, Jonal Lehrer (author of How We Decide and Proust Was a Neuroscientist) describes the "ultimatum game," which is often used in teaching Negotiations to demonstrate how important a sense of "fairness" may be to reaching an agreement.  The game has two players.  The first player is given $10 and told that he or she must offer part of it to the second player.  The first player can offer any amount, if the second player accepts the offer, both players keep their share, but if the second player rejects the offer, then both players get nothing.  Almost invariably, if the first player offers much less than $5, the second player will reject the offer--even though rejecting the offer makes the second player worse off.  (A purely rational player would accept any offer above zero, because regardless of how much player one keeps, a non-zero propeal would be a gain).    This phenomenon has been shown in a variety of contexts.  For example, given a choice of a job that will pay $80,000 in a company in which everyone else makes $80,000 or less, and a job paying $90,000 in a company in which everyone else is paid $120,000 or more, most people would prefer the first job.

Lehrer describes additional research (using brain scanners) that shows concerns over fairness or equality may not be purely selfish--that people sometimes prefer someone else be given a gift to receiving a gift themself, if it will balance out a unfair starting point.

In a nutshell, when someone says "its the principle, not the money," they may actually mean it, and it would be a mistake for a mediator or negotiator to dismiss the such non-monetary motives.  In litigation, though, the issue is complicated by other psychological tendencies, such as the tendency to underestimate the time and cost of the lawsuit and overestimate the likelihood of success.  Further, even successful litigants often come away from a lawsuit feeling beaten down by the process and without the expected satisfaction derived from vindication.  Consequently, and perhaps counter-intuitively, negotiation or mediation of a settlement may require putting "fairness" aside, because the price of fairness is simply too high.  While I don't think a negotiator or mediator can, or should, discredit or diminish the importance of fairness to the parties, I do think he or she can make a significant contribution by helping them  more accurately assess both the cost of pursuing "fairness" and the potential for disappointment.