Reputational Concerns and Bias in Arbitration

Elisabetta Iossa and Giuliana Palumbo ()

Economics and Finance Discussion Papers from Economics and Finance Section, School of Social Sciences, Brunel University

Abstract: We analyze how reputational concerns of arbitrators affect the quality of their decision making. We assume that arbitrators differ in their ability to evaluate the correct decision and that information acquisition by arbitrators is costly and unobservable. We show that reputational concerns increase incentives for information acquisition but may induce the arbitrator to bias his decision towards one party in the dispute.This decision bias is greater when the dispute is confidential rather than when it is public, and the parties are more likely to choose confidentiality for less complex subject matters. In light of these results, we study the circumstances under which the parties to a contract choose to employ arbitration, rather than litigation in court, to resolve their disputes. We show that arbiration is more likely to be chosen by symmetric and long-lived parties.enough.

Pages: 29 pages
Date: 2006-03
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.brunel.ac.uk/329/efwps/ReputationalConcernsandBiasinArbitration.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.brunel.ac.uk/329/efwps/ReputationalConcernsandBiasinArbitration.pdf [301 Moved Permanently]--> https://www.brunel.ac.uk/329/efwps/ReputationalConcernsandBiasinArbitration.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bru:bruedp:06-09

Access Statistics for this paper

More papers in Economics and Finance Discussion Papers from Economics and Finance Section, School of Social Sciences, Brunel University Brunel University, Uxbridge, Middlesex UB8 3PH, UK.
Bibliographic data for series maintained by John.Hunter ().