A comparison of arbitration procedures for risk-averse disputants

A comparison of arbitration procedures for risk-averse disputants

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Article ID: iaor200919
Country: United States
Volume: 35
Issue: 4
Start Page Number: 639
End Page Number: 664
Publication Date: Oct 2005
Journal: Decision Sciences
Authors:
Keywords: decision theory
Abstract:

We propose an arbitration model framework that generalizes many previous quantitative models of final offer arbitration, conventional arbitration, and some proposed alternatives to them. Our model allows the two disputants to be risk averse and assumes that the issue(s) in dispute can be summarized by a single quantifiable value. We compare the performance of the different arbitration procedures by analyzing the gap between the disputants' equilibrium offers and the width of the contract zone that these offers imply. Our results suggest that final offer arbitration should give results superior to those of conventional arbitration.

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