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Is Arbitration Addictive? Evidence From the Laboratory and the Field

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  • Janet Currie
  • Henry S. Farber

Abstract

We test for the presence of an addictive effect of arbitration (positive state dependence) using data both from a laboratory bargaining experiment and from the field. We find no evidence of state dependence in the experimental data, and we find weak evidence of positive state dependence in the field data on teachers in British Columbia. Hence, we reject the view that use of arbitration per se leads to state dependence either through reducing uncertainty about the arbitral process or through changing the bargaining parties' perceptions about their opponents. The results further suggest that an explanation for any positive state dependence we find in the British Columbia field data must lie in an aspect of the arbitration process which is not captured by our simple experimental design.

Suggested Citation

  • Janet Currie & Henry S. Farber, 1992. "Is Arbitration Addictive? Evidence From the Laboratory and the Field," NBER Working Papers 3952, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:3952 Note: LS
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    References listed on IDEAS

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    1. Richard J. Butler & Ronald G. Ehrenberg, 1981. "Estimating the Narcotic Effect of Public Sector Impasse Procedures," ILR Review, Cornell University, ILR School, vol. 35(1), pages 3-20, October.
    2. Currie, Janet & McConnell, Sheena, 1991. "Collective Bargaining in the Public Sector: The Effect of Legal Structure on Dispute Costs and Wages," American Economic Review, American Economic Association, vol. 81(4), pages 693-718, September.
    3. Janet Currie, 1989. "Who Uses Interest Arbitration? The Case of British Columbia's Teachers, 1947–1981," ILR Review, Cornell University, ILR School, vol. 42(3), pages 363-379, April.
    4. Henry S. Farber & Harry C. Katz, 1979. "Interest Arbitration, Outcomes, and the Incentive to Bargain," ILR Review, Cornell University, ILR School, vol. 33(1), pages 55-63, October.
    5. Thomas A. Kochan & Jean Baderschneider, 1978. "Dependence on Impasse Procedures: Police and Firefighters in New York State," ILR Review, Cornell University, ILR School, vol. 31(4), pages 431-449, July.
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    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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