The Effects of Third-Party Arbitration: A Field Experiment

Governments, firms, and consumer agencies promote third-party arbitration to end consumer-firm disputes that arise from dissatisfying services and failed service recoveries in the hope that third-party arbitration will (1) resolve the dispute, (2) repair the relationship with the service provider, and (3) empower the consumer. Literature, however, doubts these positive expectations because arbitration uses an adversarial intervention mode and does not allow consumer control of process and outcome. The results of a field experiment in the context of the Dutch Foundation for Disputes Committees diminish some of the doubts raised about arbitration: (1) complainants are more committed to the decision after the hearing, even though they are less convinced the decision is going to be in their favor, (2) complainants remain intent on never visiting the service provider again, but (3) complainants feel more in control, even though they have ceded control to the third party.