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Employment lotteries, endogenous firm formation and the aspiration core

Author

Listed:
  • Camelia Bejan

    (University of Washington-Bothell)

  • Juan Camilo Gómez

    (University of Washington-Bothell)

Abstract

The paper shows that the aspiration core of a TU-game coincides with the set of competitive wages arising in a labor market economy in which time is indivisible, but workers and firms can sign contingent labor contracts and trade in employment lotteries. The set of firms that are active in the market is endogenously determined at equilibrium and it coincides with the generating collection of the corresponding aspiration core allocation.

Suggested Citation

  • Camelia Bejan & Juan Camilo Gómez, 2017. "Employment lotteries, endogenous firm formation and the aspiration core," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 5(2), pages 215-226, October.
  • Handle: RePEc:spr:etbull:v:5:y:2017:i:2:d:10.1007_s40505-017-0115-6
    DOI: 10.1007/s40505-017-0115-6
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    References listed on IDEAS

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    1. Sun, Ning & Trockel, Walter & Yang, Zaifu, 2008. "Competitive outcomes and endogenous coalition formation in an n-person game," Journal of Mathematical Economics, Elsevier, vol. 44(7-8), pages 853-860, July.
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    3. Prescott, Edward C. & Shell, Karl, 2002. "Introduction to Sunspots and Lotteries," Journal of Economic Theory, Elsevier, vol. 107(1), pages 1-10, November.
    4. Jingang Zhao, 2001. "The relative interior of the base polyhedron and the core," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 18(3), pages 635-648.
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    Cited by:

    1. Fatma Aslan & Papatya Duman & Walter Trockel, 2020. "Non-cohesive TU-games: Efficiency and Duality," Working Papers CIE 138, Paderborn University, CIE Center for International Economics.
    2. Fatma Aslan & Papatya Duman & Walter Trockel, 2020. "Non-cohesive TU-games: Duality and P-core," Working Papers CIE 136, Paderborn University, CIE Center for International Economics.

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    More about this item

    Keywords

    Indivisible labor; Employment lotteries; Firm formation; Aspiration core; Market games;
    All these keywords.

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D60 - Microeconomics - - Welfare Economics - - - General
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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