Interest arbitration is a process for resolving deadlocks on collective bargaining agreements between two parties, in this case, labor and management. The parties present their claims and evidence to a neutral third party referred to as an arbitrator. The arbitrator is able to render a verdict on the conflict, the verdict of which is referred to as an arbitral award.

The Decision Quality Problem in Interest Arbitration

            The decision problem an arbitrator is primarily faced with is to determine what constitutes a reasonable award given two differing value functions: labor which seeks to maximize the award it can get and management which seeks to minimize the award it will give.
In current practice, decision quality is to a significant extent a function  of the arbitrators’ behavior. The arbitrator, based on the facts of the case and his judgement, forms an idea of a reasonable award. In the absence of a prescribed analytical template, he tends to determine the award by selecting an offer that is closer to the allocation he thinks is appropriate.

Towards Bridging the Quality Gap: A Methodological Prescription

            The prescription is to define decision quality as a function of a standardized methodology that will guide arbitrators’ behavior and that of the disputants and therefore promote reasonable awards and offers. If the arbitrators’ assessment or the disputants’ offer is dependent on a standard set of pre-determined and quantifiable criteria, this will make interest arbitration more predictable and therefore lessen arbitral risk and uncertainty.