Interest Arbitration, Outcomes, and the Incentive to Bargain
Farber, H.S., & Katz, H.C. (1979). Interest arbitration, outcomes, and the incentive to bargain. Industrial and Labor Relations Review, 33, 55-63.
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Copyright by Cornell University.
"This study develops a model of bargaining that demonstrates that an interest arbitration procedure will encourage negotiated settlements to the extent that risk aversion dominates the preferences of the parties and there is uncertainty regarding the arbitrator's behavior. The authors conclude that it is likely that risk aversion does dominate preferences, but the evidence is not conclusive. They also argue that uncertainty may be reduced over time for various reasons, leading to increased use of arbitration and a convergence between the terms of negotiated and arbitrated agreements."
Henry S. Farber and Harry C. Katz. "Interest Arbitration, Outcomes, and the Incentive to Bargain" Faculty Publications - Collective Bargaining, Labor Law, and Labor History (1979).
Available at: http://works.bepress.com/harry_katz/8