A comparison of arbitration procedures for risk averse disputants

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.Natural Sciences & Engineering Research Council (NSERC) Discovery Gran

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

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. --Bargaining,Arbitration,Experiments,Fair Awards

Final offer arbitration in the electric legislation in Chile

La legislación chilena que regula el sector eléctrico establece que un panel de expertos resolverá las discrepancias pertinentes. Para hacerlo, el panel deberá adoptar una de las alternativas en discusión sin que pueda adoptar valores intermedios; es decir, debe resolver la discrepancia mediante un procedimiento arbitral de oferta definitiva. Este artículo comienza con una breve introducción al procedimiento de resolución de discrepancias con arreglo a la legislación eléctrica chilena y continúa con una sinopsis de la discusión académica sobre el arbitraje de oferta definitiva. Por último, ofrece algunas sugerencias que podrían contribuir a mejorar el procedimiento arbitral que establece la legislación eléctrica chilena de modo de lograr que el procedimiento se adapte mejor a las circunstancias de cada caso oncreto.Chilean legislation regulating the electric sector provides that a panel of experts will solve the relevant discrepancies. To do so, the panel shall have to adopt one of the alternatives in discussion without being able to adopt intermediate values. This is to say disputes shall be decided by final offer arbitration. After a brief introduction on the conflict resolution procedure according to the Chilean legislation on the electric sector, this article offers an overview on final offer arbitration. Finally, the article provides some suggestions worth exploring that may contribute to the improvement of the arbitration procedure established by the Chilean legislation on the electric sector so that the procedure adaps better to the circumstances of each specific case. &nbsp