Abstract
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.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.