The Impact of Binding Interest Arbitration on Negotiation and Process Outcome

Abstract

The subject of conflict and the methods of conflict resolution are of central importance to collective bargaining. The major concern of policy makers and of negotiators in public sector labor relations, in particular, is to find a method of conflict resolution which not only would avoid work stoppages but also would be compatible with free collective bargaining. Binding interest arbitration is suggested as the method of conflict resolution which would accomplish both the purposes. Four systems of binding interest arbitration-namely, the final-offer-selection, last-offer-by-issue, open-award, and compromise—award—are being experimented with in several negotiation situations Some labor relations practitioners have expressed experiences in contradiction with the theoretical expectations of the impact of these four systems of binding interest arbitration on negotiation process and outcome This experimental study confirms the theoretical expectations, particularly of the final-offer-selection and last-offer-by-issue systems. The former system generates genuine negotiations, while the latter subverts collective bargaining.The subject of conflict is of central importance to collective bargaining, and the conflict situations between labor and management are of great concern to practitioners and researchers. A conflict situation refers to the pursuit of incompatible, or at least seemingly incompatible,

Effects of mediation and alternative forms of arbitration on bargaining behavior: A laboratory study.

“…Second, this study supports earlier research that total package final offer arbitration can reduce the chilling effect. Third, Subbarao's (1978) finding that issue-by-issue final offer arbitration is not as effective as total package final offer arbitration in reducing the chilling effect of conventional arbitration is supported by the present study.…”

“…Stern, Rehmus, Lowenberg, Kasper, and Dennis (1975), drawing from field research, reported that issue-by-issue final offer arbitration reduced the chilling effect associated with conventional arbitration. However, Subbarao (1978), using a laboratory simulation, concluded that total package final offer arbitration generates genuine bargaining, whereas issue-by-issue final offer arbitration subverts negotiations by a process similar to that occurring under conventional arbitration. Apparently, negotiators expect compromises under issue-by-issue final offer arbitration, since the arbitrator may award one or more issues to each side.…”

The moderating effect of risk on the outcomes of negotiations anticipating two forms of arbitration.

“…However, and following Notz and Starke's (1978) conclusions, due to various methodological flaws, these results may not be interpreted unequivocally. Some better, although not always perfectly controlled work, notably that of Johnson and Tullar (1972), Bigoness (1976), Notz and Starke (1978), Subbarao (1978), and Urban (Note 1) has tended to produce mutually inconsistent results. Fifteen years ago, Rasenau (1968) assured us that little was certain about third-party interventions, and the same comment is obviously applicable today.…”

Making Interest Arbitration Costly: A Policy Proposal

“…It would be possible to compare cost-formula arbitration to "open-ended" procedures, e.g., those in which the final step is a nonbinding fact finder's report. 10 For evidence on this point see [16]. Reference [17] discusses these issues in greater detail.…”