Bargaining and Information: An Empirical Analysis of a Multistage Arbitration Game

Posted: 14 Aug 2000

See all articles by Paul Pecorino

Paul Pecorino

University of Alabama - Department of Economics, Finance and Legal Studies

Mark van Boening

University of Mississippi - Department of Economics

Abstract

We conduct an experimental analysis of final offer arbitration (FOA) with differentially informed players. Under FOA, the arbitrator must choose one of the two submitted offers. In our control, the uninformed player makes an offer to the informed player prior to the submission of offers to the arbitrator. The treatment allows negotiation after offers are submitted to the arbitrator. Because these offers are potentially binding, they may transmit privately held information and, thereby, lower the dispute rate. We find that allowing negotiation in the face of potentially binding offers lowers the dispute rate by 27 percentage points.

Keywords: Bargaining, Asymmetric Information, Final Offer Arbitration, Dispute Resolution

JEL Classification: K4, J52, D82

Suggested Citation

Pecorino, Paul and van Boening, Mark, Bargaining and Information: An Empirical Analysis of a Multistage Arbitration Game. Available at SSRN: https://ssrn.com/abstract=236053

Paul Pecorino (Contact Author)

University of Alabama - Department of Economics, Finance and Legal Studies ( email )

P.O. Box 870244
Tuscaloosa, AL 35487
United States
205-348-0379 (Phone)
205-348-0590 (Fax)

Mark Van Boening

University of Mississippi - Department of Economics ( email )

371 Holman Hall
University, MS 38677
United States

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