IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Final-Offer Arbitration

  • Donald Wittman

    (Merrill College, University of California, Santa Cruz, California 95064)

In final-offer arbitration the two parties to a dispute submit final offers to an arbitrator. The arbitrator then chooses as the binding solution that offer which is closest to his own view of the appropriate outcome. Because the disputants are imperfectly informed about the arbitrator's preferences, final-offer arbitration can be modeled as a game of imperfect information. Interesting questions arise concerning the nature of the optimal strategies and how they are affected by different characteristics of the arbitrator and the disputants. We provide conditions for an equilibrium to exist in a final-offer arbitration game when there are k issues, the probability function is not specified and the disputants are either risk averse or risk neutral. Furthermore, the players may have differing beliefs about the arbitrator's probability function. We demonstrate that increased risk aversion by one of the parties will result in both players choosing positions farther away from the more risk averse party. We also discover the affect of bias (as well as the effect of increased sensitivity) by the arbitrator on the positions taken by the players.

If 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.

File URL: http://dx.doi.org/10.1287/mnsc.32.12.1551
Download Restriction: no

Article provided by INFORMS in its journal Management Science.

Volume (Year): 32 (1986)
Issue (Month): 12 (December)
Pages: 1551-1561

as
in new window

Handle: RePEc:inm:ormnsc:v:32:y:1986:i:12:p:1551-1561
Contact details of provider: Postal: 7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA
Phone: +1-443-757-3500
Fax: 443-757-3515
Web page: http://www.informs.org/Email:


More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:32:y:1986:i:12:p:1551-1561. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.