• Arbitration using the closest offer principle of arbitrator behaviour

      Armstrong, Michael J.; Hurley, William J. (Elsevier, 2002)
      In this paper we introduce a model of arbitration decision making which generalizes several previous models of both conventional arbitration and final offer arbitration. We derive the equilibrium offers that risk neutral disputants would propose, and show how these offers would vary under different arbitration procedures. In particular, we show that optimal offers made under conventional arbitration will always be more extreme than those made under final offer arbitration.
    • A comparison of arbitration procedures for risk averse disputants

      Armstrong, Michael J. (Wiley, 2004)
      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.