TY - JOUR AU - Ashenfelter,Orley AU - Currie,Janet AU - Farber,Henry S. AU - Spiegel,Matthew TI - An Experimental Comparison of Dispute Rates in Alternative Arbitration Systems JF - National Bureau of Economic Research Working Paper Series VL - No. 3417 PY - 1990 Y2 - August 1990 UR - http://www.nber.org/papers/w3417 L1 - http://www.nber.org/papers/w3417.pdf N1 - Author contact info: Orley C. Ashenfelter Industrial Relations Section Firestone Library Princeton University Princeton, NJ 08544 Tel: 609/258-4040 Fax: 609/258-2907 E-Mail: c6789@princeton.edu Janet Currie Princeton University 316 Wallace Hall Princeton, NJ 08544 Tel: 609-258-7393 Fax: 609-258-5974 E-Mail: jcurrie@princeton.edu Henry S. Farber Industrial Relations Section Firestone Library Princeton University Princeton, NJ 08544-2098 Tel: 609/258-4044 Fax: 609/258-2907 E-Mail: farber@princeton.edu Matthew Spiegel Yale School of Management POB 208200 New Haven, CT 06520-8200 E-Mail: matthew.spiegel@yale.edu AB - This paper reports the results of a systematic experimental comparison of the effect of alternative arbitration systems on dispute rates. The key to our experimental design is the use of a common underlying distribution of arbitrator "fair" awards in the different arbitration systems. This allows us to compare dispute rates across different arbitration procedures where we hold fixed the amount of objective underlying uncertainty about the arbitration awards. There are three main findings. First, dispute rates are inversely related to the monetary costs of disputes. Dispute rates were much lower in cases where arbitration was not available so that the entire pie was lost in the event of dispute. Second, contrary to conventional wisdom, the dispute rate in a final-offer arbitration system is at least as high as the dispute rate in comparable conventional arbitration system. Third, dispute rates are inversely related to the uncertainty costs of disputes. Dispute rates were lower in conventional arbitration treatments where the variance of the arbitration award was higher and imposed greater costs on risk-averse negotiators. Our results can also be interpreted as providing tentative evidence that the negotiators were risk-averse on average. ER -