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

David Dickinson

No 2001-04, Working Papers from Utah State University, Department of Economics

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.

Keywords: dispute resolution; arbitration; bargaining; experiments (search for similar items in EconPapers)
JEL-codes: J5 C9 C7 (search for similar items in EconPapers)
Pages: 32 pages
New Economics Papers: this item is included in nep-exp
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ftp://repec.bus.usu.edu/RePEc/usu/pdf/ERI2001-04.pdf First version, 2001 (application/pdf)

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