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A Comparison of Arbitration Procedures for Risk-Averse Disputants*


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    Thanks are due to the associate editor and two referees for their suggestions for improving this article, particularly in regards to its exposition. Thanks are also due to Dr. Bill Hurley at the Royal Military College of Canada for his encouragement to pursue this topic. During the research for this article Dr. Armstrong was funded in part by a Discovery Grant from Canada's Natural Sciences and Engineering Research Council (NSERC).


We propose an arbitration model framework that generalizes many previous quantitative models of final offer arbitration, conventional arbitration, and some proposed alternatives to them. Our model allows the two disputants to be risk averse and assumes that the issue(s) in dispute can be summarized by a single quantifiable value. We compare the performance of the different arbitration procedures by analyzing the gap between the disputants' equilibrium offers and the width of the contract zone that these offers imply. Our results suggest that final offer arbitration should give results superior to those of conventional arbitration.

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