An Analysis of Multivariate final-offer arbitration

Abstract

First proposed in 1966, in the United States Final-Offer Arbitration has been adopted by Major League Baseball as well as in the public sector in many states as a means or resolving negotiation impasses. We will discuss the mechanics of this arbitration method and the game theoretic model under which it has been studied. Some of the important results concerning zero-sum games and probability will be addressed. Finally we will look at the problem of extending the basic model to one where multiple issues are in dispute, and some of the surprising results of the extended model.