Sequential Arbitration Procedures: Dynamic versus Static Models of ADR
STEVEN J. BRAMS, D. MARC KILGOUR, AND SHLOMO WEBER
The sine qua non of arbitration, unlike mediation and other dispute-resolution procedures, is that an arbitrator's choice of a settlement is binding on the disputants. This is not to say that the arbitrator alone determines the settlement. Indeed, if the disputants are able to reach an agreement on their own--realizing that, if they do not, the arbitrator's judgment will come into play--then the arbitrator plays only a background role.
In most disputes, however, this background role is not inconsequential. It may crucially affect not only the bargaining process but also the nature of the settlement. For example, it may put pressure on the disputants to hammer out their own agreement rather than court the risk that the arbitrator will side with their adversary.
This risk would seem especially great under final-offer arbitration (FOA), in which two parties submit so-called final offers and the arbitrator is restricted to choosing one or the other. Unlike conventional arbitration, the arbitrator cannot "split the difference." Under FOA, the adversary's offer--rather than some compromise settlement selected by the arbitrator--is the only alternative to having one's own offer chosen.
It is for this reason, presumably, that of the 111 major-league baseball players who filed for arbitration under FOA in 1988, 93 (84 percent) negotiated contracts before FOA was actually implemented ( Chass, 1988). As one baseball arbitrator put it, "I'm starting to feel like the atomic bomb. The deterrent effect of me as an arbitrator is enough" ( Cronin, 1989, quoting Stephen B. Goldberg).
In this chapter, we shall show how the dichotomous choices under FOA can be rendered less stark by allowing the disputants to revise their initial offers. For