The Impact of Alternative Impasse Procedures on Bargaining: A Laboratory Experiment

This laboratory experiment compares the effects of two variations of conventional arbitration, two variations of final-offer arbitration, and a no-intervention or strike condition across two sets of negotiations. The results of the experiment suggest that the strike condition is more effective than arbitration in producing voluntary agreements, and that final-offer arbitration is more effective than conventional arbitration in encouraging the parties to narrow their differences. The latter result occurred, though, only after an impasse had been declared and when conventional arbitration involved the clear expectation that the arbitrator would split the difference in the parties' positions. The effectiveness of final-offer arbitration was also reduced when the parties expected the arbitrator to choose between last offers made before instead of after the close of negotiation.