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The Choice of the Agenda in Labor Negotiations: efficiency and behavioral considerations

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Author Info
Marie-Claire Villeval () (GATE CNRS)
Manfred Konigstein

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Abstract

The labor economics literature has shown that the “efficient bargaining” model, in which wage and employment are negotiated simultaneously, is less frequently used on unionized markets than the less efficient “right-to-manage” model, in which wage is determined via bargaining and employment determined subsequently and unilaterally by the firm. This paper reports an experiment in which the choice of the bargaining agenda is endogenous within a noncooperative game. We find that participants show a preference for decision authority and choose single-issue bargaining in most cases even though efficiency is lower than in multi-issue bargaining. Furthermore, multi-issue bargaining induces unions to offer smaller payoff shares and leads to a higher conflict rate than in a single-issue bargaining.

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Publisher Info
Paper provided by Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure in its series Working Papers with number 0508.

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Length: 35 pages
Date of creation: Nov 2005
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Handle: RePEc:gat:wpaper:0508

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Related research
Keywords: Bargaining agenda; Efficient contracts; Right-to manage; Decision authority; Experiments;

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Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence

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References listed on IDEAS
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  1. John M. Abowd & Francis Kramarz, 1992. "A Test of Negotiation and Incentive Compensation Models Using Longitudinal French Enterprise Data," NBER Working Papers 4044, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. MaCurdy, Thomas E & Pencavel, John H, 1986. "Testing between Competing Models of Wage and Employment Determination in Unionized Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages S3-S39, June. [Downloadable!] (restricted)
  3. Inderst, Roman, 2000. "Multi-issue Bargaining with Endogenous Agenda," Games and Economic Behavior, Elsevier, vol. 30(1), pages 64-82, January. [Downloadable!] (restricted)
  4. Bean, Charles R & Turnbull, Peter J, 1988. "Employment in the British Coal Industry: A Test of the Labour Demand Model," Economic Journal, Royal Economic Society, vol. 98(393), pages 1092-1104, December. [Downloadable!] (restricted)
  5. Brown, James N & Ashenfelter, Orley, 1986. "Testing the Efficiency of Employment Contracts," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages S40-S87, June. [Downloadable!] (restricted)
    Other versions:
  6. Eberts, Randall W & Stone, Joe A, 1986. "On the Contract Curve: A Test of Alternative Models of Collective Bargaining," Journal of Labor Economics, University of Chicago Press, vol. 4(1), pages 66-81, January. [Downloadable!] (restricted)
  7. Lang, Kevin & Rosenthal, Robert W, 2001. "Bargaining Piecemeal or All at Once?," Economic Journal, Royal Economic Society, vol. 111(473), pages 526-40, July. [Downloadable!] (restricted)
  8. Carruth, Alan A & Oswald, Andrew J, 1987. "On Union Preferences and Labour Market Models: Insiders and Outsi ders," Economic Journal, Royal Economic Society, vol. 97(386), pages 431-45, June. [Downloadable!] (restricted)
  9. Frank P. Maier-Rigaud & Jose Apesteguia, 2003. "The Role of Choice in Social Dilemma Experiments," Bonn Econ Discussion Papers bgse22_2003, University of Bonn, Germany. [Downloadable!]
  10. Bac, Mehmet & Raff, Horst, 1996. "Issue-by-Issue Negotiations: The Role of Information and Time Preference," Games and Economic Behavior, Elsevier, vol. 13(1), pages 125-134, March. [Downloadable!] (restricted)
  11. Sen, Amartya, 1988. "Freedom of choice : Concept and content," European Economic Review, Elsevier, vol. 32(2-3), pages 269-294, March. [Downloadable!] (restricted)
  12. Curhan, Jared R. & Elfenbein, Hillary Anger & Xu, Heng, 2005. "What do People Value when they Negotiate? Mapping the Domain of Subjective Value in Negotiation," Working papers 18234, Massachusetts Institute of Technology (MIT), Sloan School of Management. [Downloadable!]
  13. Weinberger, Catherine J., 2000. "Selective Acceptance and Inefficiency in a Two-Issue Complete Information Bargaining Game," Games and Economic Behavior, Elsevier, vol. 31(2), pages 262-293, May. [Downloadable!] (restricted)
  14. In, Younghwan & Serrano, Roberto, 2004. "Agenda restrictions in multi-issue bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 53(3), pages 385-399, March. [Downloadable!] (restricted)
    Other versions:
  15. Conlin, Michael & Furusawa, Taiji, 2000. "Strategic Delegation and Delay in Negotiations over the Bargaining Agenda," Journal of Labor Economics, University of Chicago Press, vol. 18(1), pages 55-73, January. [Downloadable!] (restricted)
  16. David Card, 1986. "Efficient Contracts with Costly Adjustment: Short-RUn Employment Determination for Airline Mechanics," NBER Working Papers 1931, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  17. Fershtman, Chaim, 1990. "The importance of the agenda in bargaining," Games and Economic Behavior, Elsevier, vol. 2(3), pages 224-238, September. [Downloadable!] (restricted)
    Other versions:
  18. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December. [Downloadable!] (restricted)
  19. Currie, Janet, 1991. "Employment Determination in a Unionized Public-Sector Labor Market: The Case of Ontario's School Teachers," Journal of Labor Economics, University of Chicago Press, vol. 9(1), pages 45-66, January. [Downloadable!] (restricted)
    Other versions:
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