Working Paper: NBER ID: w2351
Authors: David E. Bloom
Abstract: This study analyzes a new set of data on the decisions of conventional arbitrators. The main goal is to draw inferences about the extent to which conventional arbitration decisions are fashioned as mechanical compromises of the parties' final offers, without reference to the exogenous facts involved in different disputes. The results of the analysis are remarkably clear: conventional arbitrators tend to split-the-difference between the parties' final offers with virtually no evidence of additional systematic reference to the facts of the cases. However, since there is a substantial amount of unexplained variance in the arbitration decisions, this evidence of mechanical compromise behavior should be viewed as characterizing the overall operation of conventional arbitration mechanisms and not the behavior of individual arbitrators in any particular case. Indeed, the results are consistent with the view that individual arbitrators pay close attention to the facts of the cases, but that there is considerable variation in the structure of different arbitrators' preference functions.
Keywords: arbitration; wage disputes; labor relations
JEL Codes: J52; J53
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| parties' final offers (C79) | arbitration decisions (J52) |
| average of the employer and union final offers (J52) | average arbitration award (J52) |
| arbitration decisions (J52) | average of the final offers (D44) |
| arbitration decisions (J52) | facts of the cases (K19) |