TY - JOUR
T1 - Double-offer arbitration
AU - Zeng, Dao Zhi
AU - Nakamura, Shinya
AU - Ibaraki, Toshihide
N1 - Funding Information:
The authors acknowledge beneficial discussions with Professor M. Ohnishi of Tohuku University, Professor A. Okada of Kyoto University and Professor H. Nagamochi and M. Yagiura of our department. Comments from Prof. S. Brams (who also provided us many valuable references), S. Merrill III and H. Moulin greatly improved an earlier version of this paper. This work was partially supported by a Scientific Grant in Aid by the Ministry of Education, Science and Culture of Japan. The first author is supported by the Rotary-Yoneyama Memorial Foundation of Japan, which is gratefully acknowledged.
PY - 1996
Y1 - 1996
N2 - This paper proposes a new arbitration rule, double-offer arbitration (DOA), which aims to improve final-offer arbitration (FOA), a well-known method to settle a dispute between two disputants. Under DOA, each disputant makes double offers, primary and secondary, for settlement. If the offers of two disputants do not converge, the arbitrator evaluates the two double offers by a criterion function, then adopts the primary offer of the disputant with a better criterion value. In the literature, it has been shown that under some conditions, a Nash equilibrium exists under FOA in which the offers diverge. However, we show that, under similar conditions, there is also a Nash equilibrium under DOA, in which the secondary offers of two disputants converge. Therefore, the arbitrator's presence in the arbitration process is necessary, but not his/her actual choice.
AB - This paper proposes a new arbitration rule, double-offer arbitration (DOA), which aims to improve final-offer arbitration (FOA), a well-known method to settle a dispute between two disputants. Under DOA, each disputant makes double offers, primary and secondary, for settlement. If the offers of two disputants do not converge, the arbitrator evaluates the two double offers by a criterion function, then adopts the primary offer of the disputant with a better criterion value. In the literature, it has been shown that under some conditions, a Nash equilibrium exists under FOA in which the offers diverge. However, we show that, under similar conditions, there is also a Nash equilibrium under DOA, in which the secondary offers of two disputants converge. Therefore, the arbitrator's presence in the arbitration process is necessary, but not his/her actual choice.
KW - Double-offer arbitration (DOA)
KW - Final-offer arbitration (FOA)
KW - Game
KW - Nash equilibrium
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U2 - 10.1016/0165-4896(95)00805-5
DO - 10.1016/0165-4896(95)00805-5
M3 - Article
AN - SCOPUS:0030524807
SN - 0165-4896
VL - 31
SP - 147
EP - 170
JO - Mathematical Social Sciences
JF - Mathematical Social Sciences
IS - 3
ER -