Regret Model for Arbitration: Predicting the Outcome

International Journal of Innovation, Management and Technology, Vol. 2, No. 2, pp. 471-476, December 2011

6 Pages Posted: 1 Jan 2012 Last revised: 18 Dec 2013

See all articles by Abdulla Galadari

Abdulla Galadari

Khalifa University of Science & Technology

Hamad Al Hammadi

affiliation not provided to SSRN

Date Written: December 1, 2011

Abstract

Going through arbitration has many costs, both tangible and intangible. Going to arbitration may also result in the severance of a mutual relationship between a contractor and a client. It may result that the contractor would lose potential future profits by being barred from participating in future projects by the client. Therefore, it carries lots of risks associated with arbitration. Hence, even if the contractor is certain to win an arbitration case, the losses may outweigh the gains, resulting in regretting such a decision. This paper illustrates a mathematical multivariate matrix to determine the best decision to be taken considering a regret theory approach. A challenge for corruption in the decision- making process for arbitration is also highlighted based on a corrupt system of rewards within the organization for the pursuit of claims. Using the regret model reduces or eliminates possible decisions borne by a corrupt system. An example is provided to illustrate the difference between a typical decision theory approach and regret theory.

Keywords: Arbitration, Construction Contracts, Decision Theory, Dispute, Regret Modelling, Risk, Settlement

JEL Classification: D70, D72, D74, D78, D81

Suggested Citation

Galadari, Abdulla and Hammadi, Hamad Al, Regret Model for Arbitration: Predicting the Outcome (December 1, 2011). International Journal of Innovation, Management and Technology, Vol. 2, No. 2, pp. 471-476, December 2011, Available at SSRN: https://ssrn.com/abstract=1978159

Abdulla Galadari (Contact Author)

Khalifa University of Science & Technology ( email )

Abu Dhabi
United Arab Emirates

Hamad Al Hammadi

affiliation not provided to SSRN ( email )

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