Abstract
In this paper, a bargaining game model with two-sided outside options is presented to investigate the resolution mechanism of disputes around construction contracts. Most disputes in construction contacts stem from disaccord in contractual interpretation. Arbitration can be regarded as outside option, which is available by both parties in negotiation process. The model explains how dispute resolution processes can be controlled by third parties' adjudication. The differences in dispute resolution mechanisms of GCW and FIDIC are also analyzed, and the remaining research issues are summarized.
