Skip to main content

Research Repository

Advanced Search

Ideal Default for Resolving Disputes Efficiently

Anbarci, Nejat; Celik, Gorkem

Authors

Gorkem Celik



Abstract

We study arbitration mechanisms where two parties to the dispute have single-peaked preferences over outcomes, represented by concave utility functions. The most preferred outcome of each party is her private information. By participating in an arbitration mechanism, the parties forfeit the default outcome, which is set without consideration of private preferences. We show that the ideal default outcome for efficient dispute resolution maximizes the sum of the reservation payoffs of the most difficult agent types to persuade to participate in the mechanism. This result is contrary to the conventional wisdom that an unattractive default could force the parties to agree.

Citation

Anbarci, N., & Celik, G. (in press). Ideal Default for Resolving Disputes Efficiently. International Economic Review,

Journal Article Type Article
Acceptance Date Jun 17, 2024
Deposit Date Jun 28, 2024
Journal International Economic Review
Print ISSN 0020-6598
Publisher Wiley
Peer Reviewed Peer Reviewed
Public URL https://durham-repository.worktribe.com/output/2504950
Publisher URL https://onlinelibrary.wiley.com/journal/14682354