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Arbitration's Summer Soldiers: An Empirical Study Of Arbitration Clauses In Consumer And Nonconsumer Contracts, Theodore Eisenberg, Geoffrey P. Miller, Emily Sherwin

Emily L Sherwin

We provide the first study of varying use of arbitration clauses across contracts within the same firms. Using a sample of 26 consumer contracts and 164 nonconsumer contracts from large public corporations, we compared arbitration clause use in consumer contracts with their use in the same firms' nonconsumer contracts. Over three-quarters of the consumer agreements provided for mandatory arbitration but less than 10% of the firms' material nonconsumer, nonemployment contracts included arbitration clauses. The absence of arbitration provisions in nearly all material contracts suggests that, ex ante, many firms value, even prefer, litigation over arbitration to resolve disputes with peers. …