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A comparison of conventional, final offer, and combined arbitration for dispute resolution

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  • David Dickinson

Abstract

This paper presents results from a controlled laboratory study of bargaining behavior and dispute rates under three types of arbitration procedures. Two of these—conventional and final-offer arbitration—are commonly used in practice, while an innovative procedure called “Combined Arbitration” (Brams and Merrill 1986) is not currently used. Combined Arbitration combines the rules of the two most commonly used forms of binding arbitration (conventional and final-offer arbitration) in such a way as to generate convergent final offers in theory. Controlled laboratory results show, however, that disputes are most likely in Combined Arbitration and least likely in conventional arbitration. These results challenge the theoretical predictions of Combined Arbitration as well as the hypothesis that final-offer arbitration would be more likely to reduce disputes compared to conventional arbitration. The results may be consistent with the hypothesis that disputants are relatively optimistic about the arbitrator’s notion of a fair settlement. Implications of these findings are also discussed.

Suggested Citation

  • David Dickinson, "undated". "A comparison of conventional, final offer, and combined arbitration for dispute resolution," Working Papers 2001-04, Utah State University, Department of Economics.
  • Handle: RePEc:usu:wpaper:2001-04
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    File URL: ftp://repec.bus.usu.edu/RePEc/usu/pdf/ERI2001-04.pdf
    File Function: First version, 2001
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    Cited by:

    1. David Dickinson, 2005. "Bargaining Outcomes with Double-Offer Arbitration," Experimental Economics, Springer;Economic Science Association, vol. 8(2), pages 145-166, June.
    2. 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.

    More about this item

    Keywords

    dispute resolution; arbitration; bargaining; experiments;

    JEL classification:

    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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