Effects of multiple arbitrators on final-offer arbitration settlements

We examine final-offer arbitration in the case where there is more than one arbitrator. The two disputants submit final offers to a referee and each of the arbitrators submits an assessment to the referee. The referee then aggregates the arbitrator input and declares one of the disputants the winner. Three aggregation schemes are considered: average assessment, median assessment and majority vote. In all cases the gap between final offers becomes smaller as the number of arbitrators is increased. Moreover average aggregation gives a slightly smaller gap than does median aggregation; and median aggregation is shown to be equivalent to majority vote aggregation.