LEARNING FROM INTEREST ARBITRATION - THE NEXT ROUND

In final offer arbitration the decision of the arbitrator provides the parties with information about the preferences of the arbitrator that is not available prior to the award. Using data from Wisconsin teache r negotiations from 1977 to 1986, the authors find that the informatio n contained in an award altered the parties' expectations about the ar bitrator's preferences and influenced the subsequent negotiated settle ment. The negotiated settlement following an award was higher when the union's final offer was selected than when the employer's offer was s elected. In the round following an award, the variance in negotiated s ettlements declined, and the wage structure toward which the settlemen ts converged was one that conformed with the arbitrator's views of fai rness.