NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Rules, Coordination and Manipulability Among Arbitrators

Janet Currie

NBER Working Paper No. 3821
Issued in August 1991
NBER Program(s):   LS

This paper provides evidence that the variance of arbitrated wage settlements is systematically lower than the variance of wage settlements negotiated without arbitration using a panel of contracts between teachers and school boards in the Canadian province of British Columbia. This finding is interpreted as evidence that arbitrators coordinate their decisions. However, coordination on a rule leaves arbitrators as a group vulnerable to manipulation by coalitions of employers or employees that understand the rule. Because successful manipulation of arbitrators undermines the credibility of the institution, arbitrators as a group have incentives to change their rules from time to time. Evidence is presented that in BC, school boards were more successful than teachers at manipulating arbitrators, and that arbitrators responded by changing their rule.

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Document Object Identifier (DOI): 10.3386/w3821

Published: Journal of Labor Economics, January 1994

 
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