Have you heard of "baseball arbitration"? This style of arbitration is used in other fields beside major league baseball. In baseball style arbitration, each side separately proposes an offer to the arbitrator. The arbitrator then picks one of the offers and that's the decision (no middle ground). So, if one party offers $1 and the other offers 1,000,000, the arbitrator cannot split the difference, but must award either $1 or $1,000,000. This style arbitration has the effect of forcing both parties to submit an offer that is realistic. It also prevents the arbitrator from just "splitting the difference" which happens a lot in regular arbitration.
What are your thoughts? Is this a good model for business? What problems exist with this style?
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There are actually two kinds of "baseball arbitration". One is "day baseball arbitration" and the other is "night baseball arbitration". "Day baseball arbitration" is where the arbitrator is aware of the proposed awards and chooses the one that is most appropriate for the situation. The "night baseball arbitration" is when the awards are kept confidential and the arbitrator has no idea what has been proposed by both sides. The arbitrator crunches the numbers and comes up with what he/she believes is the best ...
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