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Efficiency and behavioral considerations in labor negotiations

  • Manfred Königstein

    (IZA - Institute for the study of labor - Institute for the Study of Labor - IZA, Universität Erfurt - Universität Erfurt)

  • Marie Claire Villeval


    (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - CNRS - Centre National de la Recherche Scientifique)

Experimental 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 fnd 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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Paper provided by HAL in its series Post-Print with number halshs-00550466.

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Date of creation: 2010
Date of revision:
Publication status: Published in Journal of Economic Psychology, Elsevier, 2010, 31 (4), pp. 599-611. <10.1016/j.joep.2010.04.003>
Handle: RePEc:hal:journl:halshs-00550466
DOI: 10.1016/j.joep.2010.04.003
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