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A Comparison of Conventional, Final-Offer, and “Combined†Arbitration for Dispute Resolution

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  • David L. Dickinson

Abstract

Two widely used forms of arbitration are conventional arbitration, in which the arbitrator makes an unconstrained settlement choice, and final-offer arbitration, in which the arbitrator must choose between disputants' final offers. Under an innovative, as yet unused approach called “combined arbitration,†if the arbitrator's notion of a fair settlement lies between the disputants' final offers, final-offer arbitration rules are used; otherwise, conventional arbitration rules are used. Theoretically, by combining the risks that the two standard forms of arbitration pose for disputants who do not voluntarily settle, combined arbitration should generate convergent final offers. The results of this controlled laboratory study show, however, that dispute rates are highest in combined arbitration and lowest in conventional arbitration. These results challenge the theoretical predictions for combined arbitration as well as claims that final-offer arbitration should reduce disputes compared to conventional arbitration. The results are, however, consistent with a simple theory of disputant optimism.

Suggested Citation

  • David L. Dickinson, 2004. "A Comparison of Conventional, Final-Offer, and “Combined†Arbitration for Dispute Resolution," ILR Review, Cornell University, ILR School, vol. 57(2), pages 288-301, January.
    • Handle: RePEc:sae:ilrrev:v:57:y:2004:i:2:p:288-301
    DOI: 10.1177/001979390405700207
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    References listed on IDEAS

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    Cited by:

    1. Gabuthy, Yannick & Jacquemet, Nicolas & Marchand, Nadège, 2008. "Does resorting to online dispute resolution promote agreements? Experimental evidence," European Economic Review, Elsevier, vol. 52(2), pages 259-282, February.
    2. Corgnet, Brice & Gächter, Simon & Hernán-González, Roberto, 2025. "The contractual dispute resolution game: Real-effort experiments on contract negotiation and arbitration," Journal of Economic Behavior & Organization, Elsevier, vol. 231(C).

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