10.2190/W34W-FX89-JAG3-35NH W34WFX89JAG335NH 0 BINDING ARBITRATION ISSUES AND A HISTORICAL OBSERVATION OF THE 1978 CONTRACT NEGOTIATIONS IN THE UNITED STATES POSTAL SERVICE: A RETROSPECTIVE VIEW 20020509 20020509 20020509 20020509 http://baywood.metapress.com/link.asp?target=contribution&id=W34WFX89JAG335NH 3 GEORGE MUNCHUS III In this article the merits of nonbinding mediation and binding arbitration are considered. These involve intervention of a third party into the dyadic negotiations. A literature search revealed both experimental and real-world evidence of the effect of the expectation of these mechanisms on the dyadic negotiations. Nonbinding arbitration was seen to be ineffective. The expectation of binding arbitration tends to be counterproductive during contract negotiations, but tends to produce workable contracts. A variant of "conventional" binding arbitration, called "final-offer arbitration" tends to produce the desired behavior in the negotiators but unworkable contracts. The process of (conventional) binding arbitration in the public sector is explained using the 1978 Postal Service contract renewal negotiations as an example.