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A Model of Bargaining with the Possibility of Arbitration


  • Paola Manzini

    (Queen Mary & Westfield College)

  • Marco Mariotti

    (Royal Holloway)


We consider an alternating offer bargaining model in which the players may agree to call in an arbitrator in case of disagreement. The main message of our study is that the mere presence of an arbitrator - who can only become active with the consent of both parties - in the background of negotiations may entirely drive their outcome. We discuss the implications of this result both for theories of arbitration and for the interpretation of cooperative bargainining solutions.

Suggested Citation

  • Paola Manzini & Marco Mariotti, 1997. "A Model of Bargaining with the Possibility of Arbitration," Game Theory and Information 9710001, EconWPA.
  • Handle: RePEc:wpa:wuwpga:9710001
    Note: Type of Document - ScientificWord2.5; prepared on IBM PC ; to print on HP; pages: 36; figures: included

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    References listed on IDEAS

    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Farber, Henry S & Bazerman, Max H, 1986. "The General Basis of Arbitrator Behavior: An Empirical Analysis of Conventional and Final-Offer Arbitration," Econometrica, Econometric Society, vol. 54(4), pages 819-844, July.
    3. Manzini, Paola, 1999. "Strategic bargaining with destructive power," Economics Letters, Elsevier, vol. 65(3), pages 315-322, December.
    4. Zeng, Dao-Zhi & Nakamura, Shinya & Ibaraki, Toshihide, 1996. "Double-offer arbitration," Mathematical Social Sciences, Elsevier, vol. 31(3), pages 147-170, June.
    5. Sakovics, J. & Ponsati, C., 1995. "Rubinstein Batgaining with Tow-Sided Options," UFAE and IAE Working Papers 318.95, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    6. Busch, Lutz-Alexander & Wen, Quan, 1995. "Perfect Equilibria in Negotiation Model," Econometrica, Econometric Society, vol. 63(3), pages 545-565, May.
    7. Avery Christopher & Zemsky Peter B., 1994. "Money Burning and Multiple Equilibria in Bargaining," Games and Economic Behavior, Elsevier, vol. 7(2), pages 154-168, September.
    8. Fernandez, Raquel & Glazer, Jacob, 1991. "Striking for a Bargain between Two Completely Informed Agents," American Economic Review, American Economic Association, vol. 81(1), pages 240-252, March.
    9. Farber, Henry S & Bazerman, Max H, 1986. "The General Basis of Arbitrator Behavior: An Empirical Analysis of Conventional and Final-Offer Arbitration," Econometrica, Econometric Society, vol. 54(6), pages 1503-1528, November.
    10. Haller, Hans & Holden, Steinar, 1990. "A letter to the editor on wage bargaining," Journal of Economic Theory, Elsevier, vol. 52(1), pages 232-236, October.
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    Cited by:

    1. Wait, A., 2001. "Delays in Bargaining With Incompelete Contracts," Department of Economics - Working Papers Series 809, The University of Melbourne.
    2. Andrew Wait, 2005. "Holdup and Innovation," Journal of Economics, Springer, vol. 85(3), pages 277-295, September.
    3. Stefan Buehler, 1999. "A Further Look at Two-way Network Competition in Telecommunications," SOI - Working Papers 9904, Socioeconomic Institute - University of Zurich, revised Apr 2000.

    More about this item


    bargaining; arbitration;

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory


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