The effect of conventional and final-offer compulsory arbitration on negotiated settlements is characterized, using Nash's variable-threats bargaining solution, with particular attention to the interaction between arbitral risk and bargainers' risk preferences. When there is no arbitral risk, both schemes are shown to have the same effect on negotiated settlements under very general conditions, even when bargaining is over several issues. Whether or not there is arbitral risk, negotiated settlements favour a bargainer more if his opponent is more risk-averse. On the other hand, increases in arbitral risk need not improve the position of the less risk-averse bargainer. As a by-product of the analysis, Kihlstrom, Roth and Schmeidler's risk-sensitivity results for the Nash and Raiffa-Kalai-Smorodinsky solutions are generalized from fixed-threats to variable-threats bargaining.

Journal Article A Self-administered Solution of the Bargaining Problem Get access Vincent P. Crawford Vincent P. Crawford University of California, San Diego Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 47, Issue 2, January 1980, Pages 385–392, https://doi.org/10.2307/2296999 Published: 01 January 1980 Article history Received: 01 January 1978 Accepted: 01 May 1979 Published: 01 January 1980

Journal Article A Game of Fair Division Get access Vincent P. Crawford Vincent P. Crawford University of California, San Diego Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 44, Issue 2, June 1977, Pages 235–247, https://doi.org/10.2307/2297064 Published: 01 June 1977

The effect of short-term contracting on resource extraction is studied, in a two-country model of international trade in oil. Countries' planners are assumed to be fully rational, with perfect information and perfect foresight. Contracts are assumed perfectly enforceable and complete, except that short-term contracts do not allow commitments to actions taken beyond the contract period. We show that short-term contracting limits countries' opportunities for intertemporal consumption-smoothing, reducing their collective tolerance for temporal variation in consumption. This tends to make them extract more slowly than in the efficient plan that results from long-term contracting.