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Wage bargaining with discount rates varying in time under exogenous strike decisions

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  • Ahmet Ozkardas

    () (Turgut Özal Üniversitesi - Iktisadi ve Idari Bilimler Fakültesi, CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne)

  • Agnieszka Rusinowska

    () (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne)

Abstract

In this paper, we present a non-cooperative wage bargaining model in which preferences of both parties, a union and a firm, are expressed by sequences of discount factors varying in time. We determine subgame perfect equilibria for three cases when the strike decision of the union is exogenous : the case when the union is supposed to go on strike in each period in which there is a disagreement, the case when the union is committed to go on strike only when its own offer is rejected, and the case when the union is supposed to go never on strike.

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  • Ahmet Ozkardas & Agnieszka Rusinowska, 2012. "Wage bargaining with discount rates varying in time under exogenous strike decisions," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00674033, HAL.
  • Handle: RePEc:hal:cesptp:halshs-00674033
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00674033
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    1. Levy, Anat & Shapley, Lloyd S, 1997. "Individual and Collective Wage Bargaining," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(4), pages 969-991, November.
    2. Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475, April.
    3. Bolt, Wilko, 1995. "Striking for a Bargain between Two Completely Informed Agents: Comment," American Economic Review, American Economic Association, vol. 85(5), pages 1344-1347, December.
    4. Fishburn, Peter C & Rubinstein, Ariel, 1982. "Time Preference," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 23(3), pages 677-694, October.
    5. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    6. 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.
    7. Robinson, James A, 1999. "Dynamic Contractual Enforcement: A Model of Strikes," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(1), pages 209-229, February.
    8. Holden Steinar, 1994. "Bargaining and Commitment in a Permanent Relationship," Games and Economic Behavior, Elsevier, vol. 7(2), pages 169-176, September.
    9. Hayes, Beth, 1984. "Unions and Strikes with Asymmetric Information," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 57-83, January.
    10. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
    11. Fernandez, Raquel & Glazer, Jacob, 1991. "Striking for a Bargain between Two Completely Informed Agents," American Economic Review, American Economic Association, vol. 81(1), pages 240-252, March.
    12. Cripps, Martin W, 1997. "Bargaining and the Timing of Investment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(3), pages 527-546, August.
    13. Cramton, Peter C & Tracy, Joseph S, 1994. "Wage Bargaining with Time-Varying Threats," Journal of Labor Economics, University of Chicago Press, vol. 12(4), pages 594-617, October.
    14. Sopher, Barry, 1990. "Bargaining and the Joint-Cost Theory of Strikes: An Experimental Study," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 48-74, January.
    15. Harold Houba & Quan Wen, 2008. "On striking for a bargain between two completely informed agents," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 37(3), pages 509-519, December.
    16. Doiron, Denise J, 1992. "Bargaining Power and Wage-Employment Contracts in a Unionized Industry," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(3), pages 583-606, August.
    17. Haller, Hans & Holden, Steinar, 1990. "A letter to the editor on wage bargaining," Journal of Economic Theory, Elsevier, vol. 52(1), pages 232-236, October.
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    Keywords

    Union; firm bargaining; strike; alternating offers; varying discount rates; subgame perfect equilibrium.; subgame perfect equilibrium; Négociation entre un syndicat et une firme; grève; offres alternantes; taux d'escompte variable; équilibre en sous-jeu parfait.;

    JEL classification:

    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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