Affiliation Bias in Arbitration: An Experimental Approach

A characteristic feature of arbitration, a growing form of legal adjudication, is that each disputing party appoints an arbitrator. Commentators, however, suggest that party-appointed arbitrators tend to be biased in favor of their appointers. Evaluating this claim from data on historical disputes is problematic because of nonrandom selection of arbitrators. Here we use a novel experimental approach to estimate the causal effect of the appointing party. Using survey experiments with arbitration experts around the world, we show that professional arbitrators suffer from affiliation effects--a cognitive predisposition to favor the appointing party. At a methodological level, we offer a solution to the problem of measuring this effect when credible observational designs are lacking.