The Impact of Compulsory Arbitration on Bargaining Behavior: An Experimental Study
AbstractA series of experiments compares bargaining behavior under three different settings: no arbitration, conventional and final offer arbitration. Under no arbitration disputes with zero payoffs were around 10%, while the pie was equally split in less than half of the cases. Under conventional arbitration - where the arbitrator is free in choosing his award - every third negotiation ended in dispute giving evidence for a modified chilling effect. Under final offer arbitration â where the arbitrator has to award to the bargainers either one of their final offers - there was only a small increase of disputes while equal splits have doubled to 80%. The experiment shows final offer arbitration, though having lower dispute rates, to interfer more with bargaining behavior than conventional arbitration where the bargaining behavior was similar to the no-arbitration treatment. Under final offer arbitration, negotiators adjust their bargaining strategy to the arbitratorÂ´s expected award. --
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Bibliographic InfoArticle provided by Springer in its journal Economics of Governance.
Volume (Year): 7 (2006)
Issue (Month): 3 (August)
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Web page: http://link.springer.de/link/service/journals/10101/index.htm
Other versions of this item:
- Kritikos, Alexander S., 2005. "The Impact of Compulsory Arbitration on Bargaining Behavior: An Experimental Study," Discussion Papers 230, European University Viadrina Frankfurt (Oder), Department of Business Administration and Economics.
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
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