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Models of Arbitrator Behavior: Theory and Evidence

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  • Orley Ashenfelter
  • David E. Bloom

Abstract

This paper analyzes and compares arbitrator behavior under conventional and final-offer arbitration. Simple models of arbitrator behavior are developed under each of these alternative mechanisms. These models are estimated and tested using data on the outcomes of both forms of arbitrationin New Jersey, a state in which arbitration is mandatory for unresolved pay disputes involving police officer unions and public employers. The major findings are (1) that the high proportion of union victories under final-offer arbitration were generated by a set of impartial arbitrators applying the same standards used in conventional arbitration, and (2) that union bargainers appear to be considerably more risk averse than employer bargainers, with the wage increases under final-offer arbitration having a lower mean and a lower variance than under conventional arbitration.

Suggested Citation

  • Orley Ashenfelter & David E. Bloom, 1983. "Models of Arbitrator Behavior: Theory and Evidence," NBER Working Papers 1149, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:1149 Note: LS
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    References listed on IDEAS

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    1. repec:fth:prinin:163 is not listed on IDEAS
    2. Crawford, Vincent P, 1979. "On Compulsory-Arbitration Schemes," Journal of Political Economy, University of Chicago Press, vol. 87(1), pages 131-159, February.
    3. William M. Landes & Richard A. Posner, 1978. "Adjudication as a Private Good," NBER Working Papers 0263, National Bureau of Economic Research, Inc.
    4. repec:fth:prinin:172 is not listed on IDEAS
    5. Orley Ashenfelter & David Bloom, 1983. "The Pitfalls in Judging Arbitrator Impartiality by Win-Loss Tallies Under Final-Offer Arbitration," Working Papers 543, Princeton University, Department of Economics, Industrial Relations Section..
    6. David E. Card, 1983. "Arbitrators as Lie Detectors," Working Papers 172, Princeton University, Department of Economics, Industrial Relations Section..
    7. Orley Ashenfelter & David Bloom, 1983. "The Pitfalls in Judging Arbitrator Impartiality by Win-Loss Tallies Under Final-Offer Arbitration," Working Papers 543, Princeton University, Department of Economics, Industrial Relations Section..
    8. Henry S. Farber, 1981. "Splitting-the-Difference in Interest Arbitration," ILR Review, Cornell University, ILR School, vol. 35(1), pages 70-77, October.
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    Citations

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    Cited by:

    1. Juan Pablo Montero, 2004. "A model of arbitration in regulation," Econometric Society 2004 Latin American Meetings 219, Econometric Society.
    2. Carmen Herrero & Juan Moreno-Ternero & Giovanni Ponti, 2010. "On the adjudication of conflicting claims: an experimental study," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 34(1), pages 145-179, January.
    3. Ashenfelter, O. & Bloom, D., 1990. "Lawyers As Agents Of The Devil In A Prisoner'S Dilemma Game," Papers 57, Princeton, Woodrow Wilson School - Discussion Paper.
    4. Ashenfelter, Orley, et al, 1992. "An Experimental Comparison of Dispute Rates in Alternative Arbitration Systems," Econometrica, Econometric Society, vol. 60(6), pages 1407-1433, November.
    5. David Dickinson, 2003. "Mediation, Walrasian Tâtonnement, and Negotiations as an Exchange Economy," Working Papers 2003-11, Utah State University, Department of Economics.
    6. Ehrenberg, Ronald G. & Schwarz, Joshua L., 1987. "Public-sector labor markets," Handbook of Labor Economics,in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 2, chapter 22, pages 1219-1260 Elsevier.
    7. Orley Ashenfelter & Gordon B. Dahl, 2003. "Strategic Bargaining Behavior, Self-Serving Biases, and the Role of Expert Agents An Empirical Study of Final-Offer Arbitration," Working Papers 857, Princeton University, Department of Economics, Industrial Relations Section..
    8. Alexandre Mas, 2006. "Pay, Reference Points, and Police Performance," The Quarterly Journal of Economics, Oxford University Press, vol. 121(3), pages 783-821.
    9. Henry S. Farber & Max H. Bazerman, 1984. "The General Basis of Arbitrator Behavior: An Empirical Analysis of Conventional and Final-Offer Arbitration," NBER Working Papers 1488, National Bureau of Economic Research, Inc.
    10. María Mercedes Adamuz & Clara Ponsatí, 2009. "Arbitration systems and negotiations," Review of Economic Design, Springer;Society for Economic Design, vol. 13(3), pages 279-303, September.
    11. Max H. Bazerman & Henry S. Farber, 1983. "Arbitrator Decision Making: When Are Final Offers Important?," NBER Working Papers 1183, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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