Efficiency and behavioral considerations in labor negotiations
AbstractExperimental literature has shown that social preferences influence how individuals bargain and make sharing decisions. It usually considers situations in which individuals negotiate on a single issue. This paper explores a different environment and reports on an experiment based on a non-cooperative game in which the choice of the bargaining agenda is endogenous. We find that firms reveal a strong preference for single-issue bargaining although the subgame perfect equilibrium predicts the choice of the multi-issue bargaining. In multi-issue bargaining unions offer smaller relative payoff shares to firms than in single-issue bargaining and this leads to a higher conflict rate than in a single-issue bargaining. Social preferences and a concern for relative payoffs support this preference for a restricted bargaining agenda but they induce a loss of efficiency.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Psychology.
Volume (Year): 31 (2010)
Issue (Month): 4 (August)
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Web page: http://www.elsevier.com/locate/joep
Bargaining agenda Efficient contracts Right-to-manage Social preferences Experiment;
Other versions of this item:
- Manfred Königstein & Marie-Claire Villeval, 2010. "Efficiency and behavioral considerations in labor negotiations," Post-Print halshs-00550466, HAL.
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