Response to 'Equilibrium Strategies for Final-Offer Arbitration: There Is No Median Convergence.'
Article Abstract:
In 'Equilibrium Stragegies for Final-Offer Arbitration: There is no Median Convergence' (Management Science 29: August 1983, pp. 927-941) Brams and Merrill argue that their final offer arbitrator model shows that divergence, rather than convergence, of equilibrium strategies is the norm. The Brams-Merrill model does not constitute good decision-making on the part of the arbitrator. Even if it were used, it would not be as adequate in results as a conventional arbitrator. The workability of final offer arbitration (FOA) is of critical importance in settling international differences. An alternative arbitrator model is proposed, game theory behavior is considered, and it is proved that in this case FOA is a superior technique.
Publication Name: Management Science
Subject: Business, general
ISSN: 0025-1909
Year: 1985
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Response to Rabow
Article Abstract:
Rabow's response (Management Science 31: March 1985, pp. 374-375) to 'Equilibrium Strategies for Final Offer Arbitration' (Management Science 29: August 1983, pp. 927-941) is the construction of a model of final offer arbitration (FOA) that leads to precisely the same nonconvergent result (when there is uncertainty) as the model he criticizes. The results in the original article are good for Rabow's model as well. Results can, of course, be changed by changing the game rules as well as by modifying the fair settlement formula.
Publication Name: Management Science
Subject: Business, general
ISSN: 0025-1909
Year: 1985
User Contributions:
Comment about this article or add new information about this topic:
Equilibrium Strategies for Final-Offer Arbitration: There is no Median Convergence
Article Abstract:
Final offer arbitration (FOA) involves each party in a settlement to submit a final offer for settlement to a neutral arbitrator. The arbitrator chooses one or the other. Theory would indicate that the two offers would converge. This is a two-person, zero sum, infinite game of imperfect information. Results indicate that the bids are typically one to two standard deviations from the mean.
Publication Name: Management Science
Subject: Business, general
ISSN: 0025-1909
Year: 1983
User Contributions:
Comment about this article or add new information about this topic:
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