TY - JOUR
T1 - An amendment to final-offer arbitration
AU - Zeng, Dao Zhi
N1 - Funding Information:
I am indebted to an anonymous referee, M.J. Armstrong, S. Brams, D.M. Kilgour, P. Manzini, T. Watanabe and seminar participants at Washington University in St. Louis, the 2002 Autumn Conference of Japanese Economic Association in Hiroshima, University of Manchester and Kagawa University for their beneficial comments. Part of this work was done when I visited the Economics Department at Washington University in St. Louis, which I thank for its hospitality. I acknowledge financial support from Japanese Ministry of Education and Science (Grant-in-Aid for Science Research 14730017 and 13851002).
PY - 2002
Y1 - 2002
N2 - 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 fulfilment, 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.
AB - 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 fulfilment, 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.
KW - Amended FOA (AFOA)
KW - Arbitration
KW - Dispute
KW - Final-offer arbitration (FOA)
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M3 - Conference article
AN - SCOPUS:0036966979
SN - 0884-3627
VL - 6
SP - 233
EP - 238
JO - Proceedings of the IEEE International Conference on Systems, Man and Cybernetics
JF - Proceedings of the IEEE International Conference on Systems, Man and Cybernetics
T2 - 2002 IEEE International Conference on Systems, Man and Cybernetics
Y2 - 6 October 2002 through 9 October 2002
ER -