A ‘divide and choose’ approach to compromising
AbstractWe study dispute resolution in the compromise model of Börgers and Postl (2009), which provides an alternative framework for analyzing the real-world procedure of tri-offer arbitration studied in Ashenfelter et al. (1992). Two parties involved in a dispute have to choose between their conflicting positions and a compromise settlement proposed by a neutral mediator. We ask how an adaptation of the familiar ‘divide and choose’ mechanism (DCM) performs as a protocol for dispute resolution in the absence of an arbitrator. We show that there is a unique equilibrium of the DCM if the parties’ von Neumann Morgenstern utilities from the compromise settlement are drawn independently from a concave distribution, or from any Beta-distribution (which need not be concave). Furthermore, for Beta-distributions that concentrate increasing probability mass on high von Neumann Morgenstern utilities of the compromise, the social choice rule implied by the DCM is asymptotically ex post Pareto efficient.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 119 (2013)
Issue (Month): 2 ()
Contact details of provider:
Web page: http://www.elsevier.com/locate/ecolet
Arbitration; Divide and choose; Collective decision making; Private information;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ashenfelter, O. & Currie, J. & Farber, H.S., 1990.
"An Experimental Comparison Of Dispute Rates In Alternative Arbritation Systems,"
562, Massachusetts Institute of Technology (MIT), Department of Economics.
- Ashenfelter, Orley, et al, 1992. "An Experimental Comparison of Dispute Rates in Alternative Arbitration Systems," Econometrica, Econometric Society, vol. 60(6), pages 1407-33, November.
- Ashenfelter, O. & Currie, J. & Farber, H.S. & Spiegel, M., 1990. "An Experimental Comparison Of Dispute Rates In Alternative Arbitration Systems," Papers 55, Princeton, Woodrow Wilson School - Discussion Paper.
- Orley Ashenfelter & Janet Currie & Henry S. Farber & Matthew Spiegel, 1990. "An Experimental Comparison of Dispute Rates in Alternative Arbitration Systems," NBER Working Papers 3417, National Bureau of Economic Research, Inc.
- Orley Ashenfelter & Janet Currie & Henry S. Farber & Matthew Spiegel, 1990. "An Experimental Comparison of Dispute Rates in Alternative Arbitration Systems," Working Papers 647, Princeton University, Department of Economics, Industrial Relations Section..
- Geoffroy de Clippel & Kfir Eliaz & Brian Knight, 2012.
"On the Selection of Arbitrators,"
2012-8, Brown University, Department of Economics.
- Börgers, Tilman & Postl, Peter, 2009.
Journal of Economic Theory,
Elsevier, vol. 144(5), pages 2057-2076, September.
- Tilman Börgers & Peter Postl, 2005. "Efficient Compromising," Levine's Bibliography 784828000000000188, UCLA Department of Economics.
- Tilman Börgers & Peter Postl, 2005. "Efficient Compromising," Levine's Bibliography 122247000000000801, UCLA Department of Economics.
- Tilman Börgers & Peter Postl, 2008. "Efficient Compromising," Discussion Papers 06-11R, Department of Economics, University of Birmingham.
- John Morgan, 2004. "Dissolving a partnership (un)fairly," Economic Theory, Springer, vol. 23(4), pages 909-923, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If references are entirely missing, you can add them using this form.