Third parties as an incentive to comply

Within an incomplete contract setting, the paper analyses the role of third parties in ameliorating incentive problems arising in the context of financial contracts with costly verification. Contrary to the findings of the bilateral lender-borrower relationship, characterised by no information revelation and a breakdown of the market, it is shown that, in the presence of third parties, an optimal contract exists and has partial information revelation. The importance of third parties is therefore not limited to improving efficiency, as it is when the contract offer comes from the informed party, but to ensure project realisation, and thus to ensure that the surplus that can arise from the project does not get lostBargaining power; contracts; costly state verification

Third-party punishment and social norms

We examine the characteristics and relative strength of third-party sanctions in a series of experiments. We hypothesize that egalitarian distribution norms and cooperation norms apply in our experiments, and that third parties, whose economic payoff is unaffected by the norm violation, may be willing to enforce these norms although the enforcement is costly for them. Almost two-thirds of the third parties indeed punished the violation of the distribution norm and their punishment increased the more the norm was violated. Likewise, up to roughly 60% of the third parties punished violations of the cooperation norm. Thus, our results show that the notion of strong reciprocity extends to the sanctioning behavior of ‘‘unaffected’’ third parties. In addition, these experiments suggest that thirdparty punishment games are powerful tools for studying the characteristics and the content of social norms. Further experiments indicate that second parties, whose economic payoff is reduced by the norm violation, punish the violation much more strongly than do third parties.Social norm; Sanction; Punishment; Strong reciprocity; Social preference; Third party

Discovery From Non-Parties (Third-Party Discovery) in International Arbitration

International arbitration rules and many arbitration laws usually provide procedures that permit tribunals to order parties to disclose documents and other materials to the other parties.1 More complex are the rules that determine opportunities to obtain discovery from persons that are not party to the arbitration (third-party discovery). This article will review third-party discovery under the Federal Arbitration Act (FAA) and the provisions of the US Code s.1782 that authorise US courts to act in aid of actions before foreign tribunals. Section 1782 has unique interest at this time because it figured prominently in the EU antitrust investigation of Intel that was initiated on request from Advanced Micro Devices (AMD). Early in that investigation, AMD filed a s.1782 request in the US District Court to obtain evidence from US sources for submission to the DG-Competition of the European Commission (EC). This request ultimately led to the Supreme Court’s decision in Intel Corp v Advanced Micro Devices Inc2 which appeared to significantly expand the scope of s.1782. Ironically, after AMD won on key legal issues in the Supreme Court, the District Court on remand exercised its discretion and denied the request for judicial assistance. This paper first describes the FAA non-party discovery rules and the split among the federal appellate courts concerning the authority of arbitrators to order prehearing discovery from non-parties. Next, it provides an analysis of the meaning of the terms “interested party” and “tribunal”—terms that were controversially interpreted by the Supreme Court in Intel and are essential to the application of s.1782. Finally, it discusses the “discretionary” factors used by the federal courts in deciding whether to grant a s.1782 request even when the statutory criteria are met. The opportunity to exercise this discretion seems to rebut the argument that the Supreme Court’s interpretation of s.1782 gives participants before foreign tribunals more discovery rights in the United States than are available to the parties in arbitrations covered by the FAA

Discovery From Non-Parties (Third-Party Discovery) in International Arbitration

International arbitration rules and many arbitration laws usually provide procedures that permit tribunals to order parties to disclose documents and other materials to the other parties.1 More complex are the rules that determine opportunities to obtain discovery from persons that are not party to the arbitration (third-party discovery). This article will review third-party discovery under the Federal Arbitration Act (FAA) and the provisions of the US Code s.1782 that authorise US courts to act in aid of actions before foreign tribunals. Section 1782 has unique interest at this time because it figured prominently in the EU antitrust investigation of Intel that was initiated on request from Advanced Micro Devices (AMD). Early in that investigation, AMD filed a s.1782 request in the US District Court to obtain evidence from US sources for submission to the DG-Competition of the European Commission (EC). This request ultimately led to the Supreme Court’s decision in Intel Corp v Advanced Micro Devices Inc2 which appeared to significantly expand the scope of s.1782. Ironically, after AMD won on key legal issues in the Supreme Court, the District Court on remand exercised its discretion and denied the request for judicial assistance. This paper first describes the FAA non-party discovery rules and the split among the federal appellate courts concerning the authority of arbitrators to order prehearing discovery from non-parties. Next, it provides an analysis of the meaning of the terms “interested party” and “tribunal”—terms that were controversially interpreted by the Supreme Court in Intel and are essential to the application of s.1782. Finally, it discusses the “discretionary” factors used by the federal courts in deciding whether to grant a s.1782 request even when the statutory criteria are met. The opportunity to exercise this discretion seems to rebut the argument that the Supreme Court’s interpretation of s.1782 gives participants before foreign tribunals more discovery rights in the United States than are available to the parties in arbitrations covered by the FAA

Mediation, arbitration and negotiation

We compare three common dispute resolution processes { negotiation, mediation, and arbitration { in the framework of Crawford and Sobel (1982). Under negotiation, the two parties engage in (possibly arbitrarily long) face-to-face cheap talk. Under mediation, the parties communicate with a neutral third party who makes a non-binding recommendation. Under arbitration, the two parties commit to conform to the third party recommendation. We characterize and compare the optimal mediation and arbitration procedures. Both mediators and arbitrators should optimally filter information, but mediators should also add noise to it. We find that unmediated negotiation performs as well as mediation if and only if the degree of conflict between the parties is low

Implications of customer participation in outsourcing noncore services to third parties

Purpose Focal service providers increasingly involve customers in the decision-making about outsourcing parts of the service delivery process to third parties. The present study investigates how customers' outsourcing decisions affect the formation of the waiting experience with the focal service provider, by which the objective waiting time, environmental quality and interactional quality act as focal drivers. Design/methodology/approach To test our hypotheses in the context of cancer care, we gathered process data and experience data by means of a patient observation template (n = 640) and a patient survey (n = 487). The combined data (n = 377) were analyzed using Bayesian models. Findings This study shows that opting for a service triad (i.e. outsourcing non-core services to a third party) deduces customers' attention away from the objective waiting time with the focal service provider but not from the environmental and interactional quality offered by the focal service provider. When the type of service triad coordination is considered, we observe similar effects for a focal service provider-coordinated service triad while in a customer-coordinated service triad the interactional quality is the sole experience driver of waiting experiences that remains significant. Originality/value By investigating the implications of customer participation in the decision-making about outsourcing parts of the service delivery process to third parties, this research contributes to the service design, service triad and service operations literature. Specifically, this study shows that customer outsourcing decisions impact waiting experience formation with the focal service provider.Purpose Focal service providers increasingly involve customers in the decision-making about outsourcing parts of the service delivery process to third parties. The present study investigates how customers' outsourcing decisions affect the formation of the waiting experience with the focal service provider, by which the objective waiting time, environmental quality and interactional quality act as focal drivers. Design/methodology/approach To test our hypotheses in the context of cancer care, we gathered process data and experience data by means of a patient observation template (n = 640) and a patient survey (n = 487). The combined data (n = 377) were analyzed using Bayesian models. Findings This study shows that opting for a service triad (i.e. outsourcing non-core services to a third party) deduces customers' attention away from the objective waiting time with the focal service provider but not from the environmental and interactional quality offered by the focal service provider. When the type of service triad coordination is considered, we observe similar effects for a focal service provider-coordinated service triad while in a customer-coordinated service triad the interactional quality is the sole experience driver of waiting experiences that remains significant. Originality/value By investigating the implications of customer participation in the decision-making about outsourcing parts of the service delivery process to third parties, this research contributes to the service design, service triad and service operations literature. Specifically, this study shows that customer outsourcing decisions impact waiting experience formation with the focal service provider.A