Discussion on “Last Offer Arbitration” (Baseball Arbitration)?

Question: What do you know about-“Last Offer Arbitration” (Baseball Arbitration)?

Answer:

This is a technique within an arbitration to try to bring both parties closer together in terms of what the amount awarded should be. Each party states its best offer as to the amount it thinks should be awarded, and the arbitrator only has the ability to choose either one proposal or the other. Thus, each side has an incentive to be reasonable, because to the extent one side is too extreme, the other side’s number will be chosen. This is sometimes called “baseball arbitration” because it has on occasion been used in establishing players’ contracts in Major League Baseball in the United States.

Book Reference:

THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION by  Margaret L. Moses, Loyola University Chicago School of Law, CAMBRIDGE UNIVERSITY PRESS, First published in 2008,Page no.15.