Bargaining in the Shadow of Arbitration

R. Marselli (), Marco Vannini and Bryan McCannon

Working Paper CRENoS from Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia

Abstract: Arbitration, as an alternative to litigation for contract disputes, reduces costs and time. While it has frequently been thought of as a substitute to pretrial bargaining and litigation, in fact, parties may be able to reach a settlement privately while engaged in the arbitration process. Consequently, the institutional design of the arbitration may influence the bargaining. We develop a theoretical model of pre-arbitration bargaining that is able to identify the impact of the institutional features on its success. A detailed data set from arbitration proceedings in Italy is analyzed. The exogenous heterogeneity in the composition of the panel of arbitrators allows us to illustrate its effect on bargaining. We show that the number of arbitrators used interacts with their experience and independence to reduce uncertainty and facilitate settlement.

Keywords: settlement; italy; contract dispute; bargaining; arbitration (search for similar items in EconPapers)
JEL-codes: C78 K41 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Bargaining in the shadow of arbitration (2015)
Working Paper: Bargaining in the Shadow of Arbitration (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:cns:cnscwp:201309

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