Private Selection and Arbitrator Impartiality

Abstract

This paper examines the effect of private selection of arbitrators over arbitrators’ incentives in deciding the cases before them in an impartial and unbiased manner. We argue that the private selection of arbitrators might adversely affect the accuracy of arbitrators’ decisions. Arbitrators might want to make an incorrect decision when a correct decision may raise the suspicion that they are biased. We compare the accuracy of arbitrators’ decisions under different arbitrator selection procedures and discuss the implications for the design of arbitration rules by arbitration and dispute resolution providers.