Barbara Rau

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Last name

In final offer arbitration the decision of the arbitrator provides the parties
with information about the preferences of the arbitrator that were not
available prior to the award. A union (employer) victory tells the parties
the fair wage belief of the arbitrator lies above (below) the mean of the
parties’ final offers. With inter-arbitrator reliability and temporal
stability in the characteristics of the bargaining pair, the award will alter
the parties’ expectations about the preferences of an arbitrator in the next
bargaining round and change negotiated settlements. The evidence from
Wisconsin teacher and school board negotiations supports this hypothesis. The
change in the negotiated wage increase from the round prior to an award to the
round after an award is about 2 percentage points greater when the union's
final offer is chosen than when the employer's offer is selected. In the
round following arbitration the variance in negotiated settlements also
declines and the structure of negotiated settlements converges to the
estimated structure of arbitrator beliefs.

Year of Publication
Date Published
Publication Language
Citation Key
Rau, B., & Olson, C. (1991). Negotiated Settlements and Learning From the Arbitration Experience. Retrieved from (Original work published June 1991)
Working Papers