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A Model of Bargaining with the Possibility of Arbitration

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  • P. Manzini
  • M. Mariotti

Abstract

We consider an alternating offer bargaining model in which the players may agree to call in an arbitrator in case of disagreement. The main message of our study is that the mere presence of an arbitrator - who can only become active with the consent of both parties - in the background of negotiations may entirely drive their outcome. We discuss the implications of this result both for theories of arbitration and for the interpretation of cooperative bargainining solutions.
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Suggested Citation

  • P. Manzini & M. Mariotti, 1997. "A Model of Bargaining with the Possibility of Arbitration," Working Papers 374, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:374
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    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
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    6. Sakovics, J. & Ponsati, C., 1995. "Rubinstein Batgaining with Tow-Sided Options," UFAE and IAE Working Papers 318.95, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
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    10. Farber, Henry S & Bazerman, Max H, 1986. "The General Basis of Arbitrator Behavior: An Empirical Analysis of Conventional and Final-Offer Arbitration," Econometrica, Econometric Society, vol. 54(6), pages 1503-1528, November.
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    Cited by:

    1. Stefan Buehler, 1999. "A Further Look at Two-way Network Competition in Telecommunications," SOI - Working Papers 9904, Socioeconomic Institute - University of Zurich, revised Apr 2000.
    2. Andrew Wait, 2005. "Holdup and Innovation," Journal of Economics, Springer, vol. 85(3), pages 277-295, September.
    3. Wait, A., 2001. "Delays in Bargaining With Incompelete Contracts," Department of Economics - Working Papers Series 809, The University of Melbourne.

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    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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