Question

Under final offer arbitration (FOA), the arbitrator selects the best package settlement presented by the union or management or proposes a compromise of both positions by splitting the difference.

a. True
b. False

Answer 1

The statement about final offer arbitration allowing the arbitrator to propose a compromise by splitting the difference is false. FOA entails selecting one party's final offer in its entirety, which encourages reasonable proposals.

Step-by-step explanation:

Under final offer arbitration (FOA), also known as "baseball arbitration", the arbitrator must select between the final offer presented by the union and management without altering any positions or proposing a compromise.

Therefore, the statement that the arbitrator proposes a compromise by splitting the difference is false. Instead, the arbitrator chooses one of the final offers in its entirety, motivating both parties to be more reasonable in their final settlement offers to avoid the risk of losing entirely.

For instance, during the 1902 Anthracite Coal Strike, miners demanded a 20 percent raise and a closed shop, which were initially refused by management. President Roosevelt intervened, proposing arbitration, which eventually led to the workers receiving a 10 percent raise and some of their conditions but not the closed shop. This example demonstrates a historical case of arbitration but differs from FOA as a compromise was reached rather than selecting one final offer over another.