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I'm not really buying this informational asymmetry argument. Yes the companies will have been in more cases than the consumer, but that's not really a relevan

I'm not really buying this informational asymmetry argument. Yes the companies will have been in more cases than the consumer, but that's not really a relevant comparison. The consumer isn't picking the arbitrator, his lawyer is, and he and his firm will have been involved in a lot of cases.

EGreg 3y ago
It is just like when producers aggregate into cartels like the AMA (American Medical Association) so consumers aggregate into insurance companies (eg Medicare). At the end the situation isn’t so great for people who fall through the cracks with unusual issues, but for common scenarios it’s great. The unusual issues should still have access to the ad-hoc market and usually there, producers (with all their resources and organization) have the advantage.
RugnirViking 3y ago
but to say it isn't happening raises a lot of questions. Why do so many firms so widely put mandatory arbritration clauses? why are pro-business arbitrators more likely to be chosen (despite, as you hypothesise, equal information)? could it be that there are simply more pro-buisness arbitrators than pro-consumer? so a random list would have too many for customer representative to strike off?
- fallingknife 3y ago
  Arbitration is quicker and cheaper than litigation. That alone is enough to explain why they want it. There may well be bias, but merely the fact that companies want this is not evidence of it.
nevinera 3y ago
If on average 100% of cases involve a company that is paying for an arbitration lawyer and even 80% of cases involve an individual that is paying for an arbitration lawyer (which I _highly doubt_, though I couldn't quickly find numbers), the net result in the long term is not that "20% of individuals get a negative outcome", it's far worse. This article is talking about the net effect, which is that the fact that there _is_ asymmetry means that arbitrators have an interest in _being_ biased against the individual, which means that even if you are paying for an arbitration lawyer, they are simply ruling out the _most_ biased firms, while the corporate arbitration lawyer is ruling out the _least_ biased firms. Think natural-selection, rather than game theory.
- fallingknife 3y ago
  Arbitration is an abbreviated legal proceeding designed to be much faster and cheaper than litigation. It is not designed to be a substitute for legal representation. The idea of going into arbitration against a company without a lawyer seems absolutely insane to me and I would bet that the number of plaintiffs with representation is close to 100%. I also do not have actual data on this, though.
  - deleted 3y ago
    [deleted]
k1t 3y ago
The company picks the arbitrator, and they unsurprisingly pick ones that typically side with the company. This is the defendant choosing the judge and jury.
- tptacek 3y ago
  Apparently no, in most cases both sides have to agree on the arbitrator.
  - dbg31415 3y ago
    It’s rigged. Both sides have a say on paper. But the company gets to pick 2, but then you only get to pick from the 2 they suggested. You don’t have a real choice. It’s just rigged to make it sound like you do.
cool_dude85 3y ago
So I sign away my right to real legal recourse because the arbitration process is quicker and cheaper, but to not get screwed over I still have to pay a lawyer?
- munk-a 3y ago
  Yes, you always want to retain your own lawyer - and it will be cheaper to hire a lawyer to see through an arbitration than a full lawsuit. Additionally most of the binding arbitration agreements I've seen consign the cost of the arbitrator to the company - so you're not paying the often thousands or tens of thousands of dollars to the retired judge who will rule on the case. I personally object to binding arbitration - but it is certainly less expensive to engage in arbitration than a full lawsuit. Additionally it may be possible to recoup your legal fees as part of the final arbitration, though this is not guaranteed (and shouldn't be for very good reasons).

EGreg 3y ago

It is just like when producers aggregate into cartels like the AMA (American Medical Association) so consumers aggregate into insurance companies (eg Medicare). At the end the situation isn’t so great for people who fall through the cracks with unusual issues, but for common scenarios it’s great. The unusual issues should still have access to the ad-hoc market and usually there, producers (with all their resources and organization) have the advantage.

RugnirViking 3y ago

but to say it isn't happening raises a lot of questions. Why do so many firms so widely put mandatory arbritration clauses? why are pro-business arbitrators more likely to be chosen (despite, as you hypothesise, equal information)? could it be that there are simply more pro-buisness arbitrators than pro-consumer? so a random list would have too many for customer representative to strike off?

fallingknife 3y ago
Arbitration is quicker and cheaper than litigation. That alone is enough to explain why they want it. There may well be bias, but merely the fact that companies want this is not evidence of it.

nevinera 3y ago

If on average 100% of cases involve a company that is paying for an arbitration lawyer and even 80% of cases involve an individual that is paying for an arbitration lawyer (which I _highly doubt_, though I couldn't quickly find numbers), the net result in the long term is not that "20% of individuals get a negative outcome", it's far worse. This article is talking about the net effect, which is that the fact that there _is_ asymmetry means that arbitrators have an interest in _being_ biased against the individual, which means that even if you are paying for an arbitration lawyer, they are simply ruling out the _most_ biased firms, while the corporate arbitration lawyer is ruling out the _least_ biased firms. Think natural-selection, rather than game theory.

fallingknife 3y ago
Arbitration is an abbreviated legal proceeding designed to be much faster and cheaper than litigation. It is not designed to be a substitute for legal representation. The idea of going into arbitration against a company without a lawyer seems absolutely insane to me and I would bet that the number of plaintiffs with representation is close to 100%. I also do not have actual data on this, though.
- deleted 3y ago
  [deleted]

k1t 3y ago

The company picks the arbitrator, and they unsurprisingly pick ones that typically side with the company. This is the defendant choosing the judge and jury.

tptacek 3y ago
Apparently no, in most cases both sides have to agree on the arbitrator.
- dbg31415 3y ago
  It’s rigged. Both sides have a say on paper. But the company gets to pick 2, but then you only get to pick from the 2 they suggested. You don’t have a real choice. It’s just rigged to make it sound like you do.

cool_dude85 3y ago

So I sign away my right to real legal recourse because the arbitration process is quicker and cheaper, but to not get screwed over I still have to pay a lawyer?

munk-a 3y ago
Yes, you always want to retain your own lawyer - and it will be cheaper to hire a lawyer to see through an arbitration than a full lawsuit. Additionally most of the binding arbitration agreements I've seen consign the cost of the arbitrator to the company - so you're not paying the often thousands or tens of thousands of dollars to the retired judge who will rule on the case. I personally object to binding arbitration - but it is certainly less expensive to engage in arbitration than a full lawsuit. Additionally it may be possible to recoup your legal fees as part of the final arbitration, though this is not guaranteed (and shouldn't be for very good reasons).