Arbitration systems are often used to resolve labor disputes
because on-going employment relationships are likely to contain specific
(human capital) investments. Recent research indicates that the ex ante
acceptability of arbitration to the parties must depend, in part, on the
unpredictability of the arbitrator's award. It is shown that the usual
selection process for arbitrators does imply that arbitrator decisions
should be statistically exchangeable (in the limit), and the evidence
available to date supports this hypothesis.