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Interest Arbitration and the Incentive to Bargain

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  • Brian P. McCall

    (University of Minnesota)

Abstract

This article develops an asymmetric information model of final-offer arbitration. If the union negotiator has superior information about the bargaining environment, then the union rank and file may find it in their best interest to require their negotiator to go to arbitration some of the time. In a simple two-state model, it is shown that if arbitration is rational for the union rank and file, it will occur only in the state where the bargaining environment is unfavorable to the union.

Suggested Citation

  • Brian P. McCall, 1990. "Interest Arbitration and the Incentive to Bargain," Journal of Conflict Resolution, Peace Science Society (International), vol. 34(1), pages 151-167, March.
    • Handle: RePEc:sae:jocore:v:34:y:1990:i:1:p:151-167
    DOI: 10.1177/0022002790034001008
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    References listed on IDEAS

    as
    1. Gibbons, Robert, 1988. "Learning in Equilibrium Models of Arbitration," American Economic Review, American Economic Association, vol. 78(5), pages 896-912, December.
    2. Myerson, Roger B, 1979. "Incentive Compatibility and the Bargaining Problem," Econometrica, Econometric Society, vol. 47(1), pages 61-73, January.
    3. Bloom, David E & Cavanagh, Christopher L, 1987. "Negotiator Behavior under Arbitration," American Economic Review, American Economic Association, vol. 77(2), pages 353-358, May.
    4. Hayes, Beth, 1984. "Unions and Strikes with Asymmetric Information," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 57-83, January.
    5. Henry S. Farber & Max H. Bazerman, 1987. "Divergent Expectations as a Cause of Disagreement in Bargaining: Evidence from a Comparison of Arbitration Schemes."," NBER Working Papers 2139, National Bureau of Economic Research, Inc.
    6. Crawford, Vincent P, 1982. "A Theory of Disagreement in Bargaining," Econometrica, Econometric Society, vol. 50(3), pages 607-637, May.
    7. Farber, Henry S & Bazerman, Max H, 1987. "Why Is There Disagreement in Bargaining?," American Economic Review, American Economic Association, vol. 77(2), pages 347-352, May.
    8. Henry S. Farber & Max H. Bazerman, 1987. "Divergent Expectations as a Cause of Disagreement in Bargaining: Evidence from a Comparison of Arbitration Schemes," Working papers 438, Massachusetts Institute of Technology (MIT), Department of Economics.
    9. Laffont, Jean-Jacques & Tirole, Jean, 1988. "The Dynamics of Incentive Contracts," Econometrica, Econometric Society, vol. 56(5), pages 1153-1175, September.
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    Cited by:

    1. Cramton, Peter C & Tracy, Joseph S, 1992. "Strikes and Holdouts in Wage Bargaining: Theory and Data," American Economic Review, American Economic Association, vol. 82(1), pages 100-121, March.
    2. Richard P. Chaykowski, 2019. "Time to Tweak or Re-boot? Assessing the Interest Arbitration Process in Canadian Industrial Relations," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 539, April.
    3. Amy Farmer Curry & Paul Pecorino, 1993. "The Use of Final Offer Arbitration as a Screening Device," Journal of Conflict Resolution, Peace Science Society (International), vol. 37(4), pages 655-669, December.
    4. David Card & Brian P. McCall, 2009. "When to Start a Fight and When to Fight Back: Liability Disputes in the Workers' Compensation System," Journal of Labor Economics, University of Chicago Press, vol. 27(2), pages 149-178, April.
    5. John W. Budd & Aaron Sojourner & Jaewoo Jung, 2017. "Are Voluntary Agreements Better? Evidence from Baseball Arbitration," ILR Review, Cornell University, ILR School, vol. 70(4), pages 865-893, August.
    6. Bradley R. Weinberg, 2020. "Third-Party Intervention and the Preservation of Bargaining Relationships," ILR Review, Cornell University, ILR School, vol. 73(2), pages 498-527, March.
    7. Michele Campolieti & Chris Riddell, 2019. "Interest Arbitration and the Narcotic Effect: Evidence from Three Decades of Collective Bargaining in Ontario," British Journal of Industrial Relations, London School of Economics, vol. 57(3), pages 421-452, September.

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