TY - JOUR
T1 - An amendment to final-offer arbitration
AU - Zeng, Dao Zhi
N1 - Funding Information:
I am indebted to an anonymous referee, M.J. Armstrong, S. Brams, D.M. Kilgour, P. Manzini, T. Watanabe and seminar participants at Washington University in St. Louis, the 2002 Autumn Conference of Japanese Economic Association in Hiroshima, University of Manchester and Kagawa University for their beneficial comments. Part of this work was done when I visited the Economics Department at Washington University in St. Louis, which I thank for its hospitality. I acknowledge financial support from Japanese Ministry of Education and Science (Grant-in-Aid for Science Research 14730017 and 13851002).
PY - 2003/8
Y1 - 2003/8
N2 - Final-offer arbitration (FOA) was proposed to settle a dispute between two disputants. Although FOA was proposed to induce two disputants to reach an agreements by themselves, FOA fails to achieve the fulfillment, when disputants have incomplete information about the arbitrator's notion of a fair settlement. This paper proposes a new arbitration procedure, which is a simple amendment to FOA that lets the arbitration settlement be determined by the loser's offer if the offers diverge. We show that the offers converge in a unique pure strategy Nash equilibrium without any additional condition. We also provide two methods to prevent an extreme arbitration result, in case the offers do not converge for some reasons.
AB - Final-offer arbitration (FOA) was proposed to settle a dispute between two disputants. Although FOA was proposed to induce two disputants to reach an agreements by themselves, FOA fails to achieve the fulfillment, when disputants have incomplete information about the arbitrator's notion of a fair settlement. This paper proposes a new arbitration procedure, which is a simple amendment to FOA that lets the arbitration settlement be determined by the loser's offer if the offers diverge. We show that the offers converge in a unique pure strategy Nash equilibrium without any additional condition. We also provide two methods to prevent an extreme arbitration result, in case the offers do not converge for some reasons.
KW - Amended FOA (AFOA)
KW - Arbitration
KW - Dispute
KW - Final-offer arbitration (FOA)
UR - http://www.scopus.com/inward/record.url?scp=0038246568&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=0038246568&partnerID=8YFLogxK
U2 - 10.1016/S0165-4896(03)00005-2
DO - 10.1016/S0165-4896(03)00005-2
M3 - Article
AN - SCOPUS:0038246568
VL - 46
SP - 9
EP - 19
JO - Mathematical Social Sciences
JF - Mathematical Social Sciences
SN - 0165-4896
IS - 1
ER -