A Model of Bargaining with the Possibility of Arbitration
36 Pages Posted: 8 Feb 1998
Date Written: October 1997
We consider an alternating offer bargaining model in which the players may agree to call in an arbitrator in case of disagreement. The main message of our study is that the mere presence of an arbitrator - who can only become active with the consent of both parties - in the background of negotiations may entirely drive their outcome. We discuss the implications of this result both for theories of arbitration and for the interpretation of cooperative bargainining solutions.
JEL Classification: C78, K49
Suggested Citation: Suggested Citation