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Discovery in a screening model of final offer arbitration

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  • Farmer, Amy
  • Pecorino, Paul

Abstract

We develop screening models of final offer arbitration (FOA) in which the uninformed party makes a demand to the informed party. We consider models in which settlement occurs before and after the submission of binding offers, and in each we analyze costly discovery. Our results are compared to conventional arbitration (CA) which may be viewed as a litigation model. Overall, the incentive to invoke discovery is stronger in FOA than in CA, due in part, to informational rents often present in FOA, but not in CA. Moreover, submitted proposals under FOA contain information which raise the benefit of invoking discovery. FOA is a widely used procedure, including in the telecommunications industry.

Suggested Citation

  • Farmer, Amy & Pecorino, Paul, 2022. "Discovery in a screening model of final offer arbitration," International Review of Law and Economics, Elsevier, vol. 69(C).
    • Handle: RePEc:eee:irlaec:v:69:y:2022:i:c:s0144818821000673
    DOI: 10.1016/j.irle.2021.106043
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    References listed on IDEAS

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