Discussion Paper Series in Economics, Department of Economics, Norwegian School of Economics (NHH)
Sigbjørn Birkeland d.y.
Negotiation under possible third party settlement.
Abstract: The effect of possible third party settlement on
negotiation behaviour is studied in an economic bargaining experiment. The
bargaining phase is preceded by a production phase that allows for
different fairness principles to guide the division of the total production
value. The experimental results show that a possible third party settlement
lowers the dispute costs by reducing the number of rounds of alternating
offers. In the presence of a third party, negotiators make first offers
that are more strongly related to their production, which reduces the
number of rounds of bargaining. The production phase has an effect on the
distributional property of the settlements. In negotiations where third
party settlement is an option, the negotiation outcome shifts towards a
more unequal outcome, more in line with each person's contribution.
Keywords: Arbitration; Bargaining effciency; Experiment.; (follow links to similar papers)
JEL-Codes: C78; D63; J52; (follow links to similar papers)
34 pages, November 15, 2010
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