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The Role of Arbitration Costs and Risk Aversion in Dispute Outcomes
Author(s) -
FARBER HENRY S.,
NEALE MARGARET A.,
BAZERMAN MAX H.
Publication year - 1990
Publication title -
industrial relations: a journal of economy and society
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.61
H-Index - 57
eISSN - 1468-232X
pISSN - 0019-8676
DOI - 10.1111/j.1468-232x.1990.tb00759.x
Subject(s) - arbitration , negotiation , risk aversion (psychology) , economics , human settlement , microeconomics , expected utility hypothesis , financial economics , law , political science , archaeology , history
The effects of risk aversion and of arbitration costs on bargaining outcomes are investigated using data from 171 simulated negotiations. The results are generally consistent with predictions from a simple economic bargaining model. We find strong evidence that directs costs of arbitration lead to higher rates of agreement. There is only weak evidence the risk aversion is related to the probability of agreement, but negotiated settlements seems to favor the less risk‐averse bargainer.