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Arbitration and Distributive Justice: Equity or Equality?

Notz, William W.; Starke, Frederick A.. Journal of Applied Psychology, Jan. 1, 1987

In this article, the authors describe the results of a study that examined how arbitrators weigh equity versus equality when making decisions. Using law students and professional arbitrators as their study subjects, the authors presented each group with two hypothetical arbitration cases and had them make their decision using differing variables. The main variable was in the arbitration rules: some participants followed conventional arbitration, in which the arbitrator is free to set any award regardless of the offers from the two parties; and others followed final offer arbitration rules, which require the arbitrator to choose from one of the parties' offers. Overall, the authors found that subjects using the conventional arbitration model appeared to favor equality in their decisions, while those using final offer arbitration favored equity. Expanding on this finding, the authors predicted that the rules used in arbitration would also affect the actions of the parties themselves. Specifically, conventional arbitration may lead bargainers to expect an equality-oriented, "split-the-difference" approach from their arbitrators, and may therefore exaggerate their claims to alter the final award. In contrast, the authors argue that final offer arbitration may create an uncertainty in the process that would lead to compromise and concession from the parties.

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