The Impact of Compulsory Arbitration on Bargaining Behavior: An Experimental Study

Arbeitspapier

A series of experiments compares bargaining behavior under three different settings: no arbitration, conventional and final offer arbitration. Under no arbitration disputes with zero payoffs were around 10%, while the pie was equally split in less than half of the cases. Under conventional arbitration - where the arbitrator is free in choosing his award - every third negotiation ended in dispute giving evidence for a modified chilling effect. Under final offer arbitration - where the arbitrator has to award to the bargainers either one of their final offers - there was only a small increase of disputes while equal splits have doubled to 80%. The experiment shows final offer arbitration, though having lower dispute rates, to interfer more with bargaining behavior than conventional arbitration where the bargaining behavior was similar to the no-arbitration treatment. Under final offer arbitration, negotiators adjust their bargaining strategy to the arbitrator's expected award.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Paper ; No. 230

Classification and Topics

• Classification: Wirtschaft ; Design of Experiments: Laboratory, Individual ; Equity, Justice, Inequality, and Other Normative Criteria and Measurement ; Bargaining Theory; Matching Theory
• Subject: Bargaining ; Arbitration ; Experiments ; Fair Awards ; Verhandlungstheorie ; Schiedsgerichtsbarkeit ; Experiment ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kritikos, Alexander S.
• Event: Veröffentlichung
• (who): European University Viadrina, Department of Business Administration and Economics
• (where): Frankfurt (Oder)
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/23802
• Last update: 10.03.2025, 11:44 AM CET