Does Information About Arbitrators' Win/Loss Ratios Improve Their Accuracy?

Abstract

This paper examines how providing litigants with information about arbitrators’ Win/Loss ratios affects arbitrators’ incentives in deciding the cases before them in an impartial and unbiased manner. We show that if litigants are informed about arbitrators’ past decisions then arbitrators might want to make an incorrect decision when a correct decision would raise the suspicion that they are biased. Therefore, providing information about arbitrators’ past decisions might create adverse incentive effects and reduce the accuracy of arbitration. We compare the accuracy of arbitrators’ decisions under different arbitrator selection procedures and discuss the implications for the design of arbitration rules by arbitration and dispute resolution providers and by court administered arbitration programs.

Keywords: Arbitration, Bad Reputation

JEL Classification: K40, K41