Baseball Arbitration

An arbitration process where the arbitral tribunal chooses between the proposals for a resolution put forward by each party, rather than crafting a solution itself, which might be compromise between the parties’ positions. The theory is that, realising that the more reasonable proposal will be adopted by the tribunal, each party has an incentive to make reasonable offers, indeed “final offers.” Baseball arbitration is used in some forward looking settlements such as labour contracts. It is also known as Pendulum arbitration, or final offer arbitration.

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