Optimal Arbitration

Tymofiy Mylovanov, Andriy Zapechelnyuk*

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    4 Citations (Scopus)

    Abstract

    We study common arbitration rules for disputes of two privately informed parties, final offer and conventional arbitration. Conventional arbitration is shown to be an optimal arbitration rule in environments with transferable utility, while final offer arbitration is optimal if utility is nontransferable and the parties' interests are not too aligned. These results explain the prevalence of both arbitration rules in practice.

    Original languageEnglish
    Pages (from-to)769-785
    Number of pages17
    JournalInternational Economic Review
    Volume54
    Issue number3
    DOIs
    Publication statusPublished - Aug 2013

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