How powerful is arbitration procedure AFOA?

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)

Abstract

Recently, an amendment to final-offer arbitration (AFOA) was proposed to improve the well-known final-offer arbitration (FOA): AFOA is powerful enough to overcome the uncertainty about the arbitrator's notion of a fair settlement, if both disputants are risk neutral. This paper further examines the behavior of AFOA when two disputants are not risk neutral, by use of an existing concept of contract zone and a newly proposed concept of convergent-offer zone. The result is that AFOA is riskier than other existing procedures, therefore more powerful to induce an agreement between risk-averse disputants.

Original languageEnglish
Pages (from-to)227-240
Number of pages14
JournalInternational Review of Law and Economics
Volume26
Issue number2
DOIs
Publication statusPublished - 2006 Jun 1
Externally publishedYes

Keywords

  • Amended FOA (AFOA)
  • Dispute
  • Final-offer arbitration (FOA)
  • Risk aversion

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Law

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