Amended Final Offer Arbitration is Promising: Evidence from the Laboratory

Abstract Arbitration is frequently utilized to settle disputes. Much research has focused on the properties of final offer arbitration (FOA) relative to conventional arbitration. Both mechanisms should encourage settlement in standard environments, previous empirical work finds that impasses are common. A modification of FOA, amended final offer arbitration (AFOA), has been proposed as an alternative mechanism. This paper compares the theoretical and behavioral properties of AFOA and FOA. Based on controlled laboratory experiments, AFOA outperforms FOA, generating significantly greater pre-arbitration settlement. Consistent with the theoretical predictions, offers converge under AFOA; however, FOA offers neither converge nor are consistent with theoretical predictions

Measuring Risk Attitudes Controlling for Personality Traits*

Abstract: This study measures risk attitudes using two paid experiments: the Holt and Laury (2002) procedure and a variation of the game show Deal or No Deal. The participants also completed a series of personality questionnaires developed in the psychology literature including the risk domains of Weber, Blais, and Betz (2002). As in previous studies risk attitudes vary within subjects across elicitation methods. However, this variation can be explained by individual personality traits. Specifically, subjects behave as though the Holt and Laury task is an investment decision while the Deal or No Deal task is a gambling decision

Lawson criterion for ignition exceeded in an inertial fusion experiment

For more than half a century, researchers around the world have been engaged in attempts to achieve fusion ignition as a proof of principle of various fusion concepts. Following the Lawson criterion, an ignited plasma is one where the fusion heating power is high enough to overcome all the physical processes that cool the fusion plasma, creating a positive thermodynamic feedback loop with rapidly increasing temperature. In inertially confined fusion, ignition is a state where the fusion plasma can begin "burn propagation" into surrounding cold fuel, enabling the possibility of high energy gain. While "scientific breakeven" (i.e., unity target gain) has not yet been achieved (here target gain is 0.72, 1.37 MJ of fusion for 1.92 MJ of laser energy), this Letter reports the first controlled fusion experiment, using laser indirect drive, on the National Ignition Facility to produce capsule gain (here 5.8) and reach ignition by nine different formulations of the Lawson criterion

Strategic bidding and investments in final offer arbitration: Theory and experimental evidence

Given the sizeable savings, many disputes are resolved via arbitration. Numerous studies have considered the strategic incentives of various forms of arbitration, most notably final offer arbitration (FOA). While previous work focused exclusively on optimal offers, in reality disputants make a series of perhaps interrelated choices. This paper considers FOA disputants making an additional investment decision regarding their case. We consider four cases distinguished by the sequence and observability of choices. The theoretical results indicate that it is socially optimal for disputants to make publicly observable offers prior to investment decisions. Behavior in controlled laboratory experiments weakly confirms this conclusion.Arbitration Dispute resolution Experiments

Amended final-offer arbitration over an uncertain value: A comparison with CA and FOA

Arbitration is increasingly employed to resolve disputes. Two arbitration mechanisms, conventional arbitration (CA) and final-offer arbitration (FOA) are commonly utilized, but previous theoretical and empirical research has found that they are unsatisfactory. Several alternative mechanisms have been proposed, but ultimately laboratory research has found that they do not offer an improvement. An exception is amended final-offer arbitration (AFOA), which not only has desirable theoretical properties but also has been demonstrated to outperform FOA in the laboratory. This study provides a direct laboratory comparison of AFOA with CA. Also, by utilizing an environment with an uncertain payoff to one of the parties, this study tests the robustness of AFOA’s performance relative to FOA. The results indicate that AFOA does outperform FOA, but that AFOA is only weakly better than CA. Copyright Economic Science Association 2007Arbitration, Bargaining, Dispute resolution, Experiments,