TY - JOUR
T1 - Amended final-offer arbitration over an uncertain value
T2 - A comparison with CA and FOA
AU - Deck, Cary
AU - Farmer, Amy
AU - Zeng, Dao Zhi
N1 - Funding Information:
Acknowledgments Deck and Farmer gratefully acknowledge the Decision, Risk and Management Science program and the East Asia and Pacific program of the National Science Foundation (SES-0350709), while Zeng acknowledges support from Kagawa University, the Japanese Ministry of Education, Culture, Sports, Science and Technology (Grant-in-Aid for Science Research 18530179) and Zhejiang University (CRPE Joint Research). All the authors wish to thank Christopher Skrocki for valuable research assistance. This paper benefited greatly from the comments of D.L. Dickinson and two anonymous referees.
PY - 2007/12
Y1 - 2007/12
N2 - 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.
AB - 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.
KW - Arbitration
KW - Bargaining
KW - Dispute resolution
KW - Experiments
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U2 - 10.1007/s10683-006-9146-9
DO - 10.1007/s10683-006-9146-9
M3 - Article
AN - SCOPUS:36048982510
VL - 10
SP - 439
EP - 454
JO - Experimental Economics
JF - Experimental Economics
SN - 1386-4157
IS - 4
ER -