The effect of a larger contract zone on agreement rates under arbitration

Georgia Kosmopoulou and Daniel M. Nedelescu

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2022, vol. 100, issue C

Abstract: In the arbitration literature there is no common agreement about the nature of the relationship between the size of the contract zone and agreement rates. The results from our experiment show that, when the size of the contract zone increases there are two prevailing effects: one effect is attributed to changes in the range of possible outcomes, and the other to coordination issues. While more room for negotiation leads to higher agreement rates, coordination problems largely impede agreement among rational subjects. The overall effect of an increase in the contract zone depends on the relative magnitude of these opposing effects.

Keywords: Arbitration; Experiments; Coordination; Contract zone (search for similar items in EconPapers)
JEL-codes: C9 D74 J52 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:100:y:2022:i:c:s2214804322000751

DOI: 10.1016/j.socec.2022.101901

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