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Efficiency and behavioral considerations in labor negotiations

  • Manfred Königstein

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

  • Marie-Claire Villeval

    (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon)

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
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Publication status: Published, Journal of Economic Psychology, 2010, 31, 4, pp. 599-611
Handle: RePEc:hal:journl:halshs-00550466
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00550466
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