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Market Power Effects on Worker-Employer Network Formation in Evolutionary Labor Markets with Adaptive Search

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  • Leigh Tesfatsion

    () (Iowa State University)

Abstract

This study reports on market power experiments for an agent-based computational model of a labor market. Workers and employers repeatedly choose and refuse worksite partners on the basis of continually updated expected returns, engage in worksite interactions modelled as two-person games, and evolve their worksite strategies over time. Three treatment factors affecting the relative market power of workers and employers are experimentally varied: market structure (two-sided, partially fluid, and endogenous type markets); market concentration (ratio of workers to employers); and market capacity (ratio of potential work offers to potential job openings). Particular attention is focused on experimentally determined correlations between market power and the formation of contractual networks among workers and employers, and between contractual network formation and the types of worksite interactions and welfare outcomes that these contractual networks support.

Suggested Citation

  • Leigh Tesfatsion, 1999. "Market Power Effects on Worker-Employer Network Formation in Evolutionary Labor Markets with Adaptive Search," Computing in Economics and Finance 1999 543, Society for Computational Economics.
  • Handle: RePEc:sce:scecf9:543
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    File URL: http://www.econ.iastate.edu/tesfatsi/evlab.ps
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    References listed on IDEAS

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    1. Tesfatsion, Leigh, 1998. "Preferential Partner Selection in Evolutionary Labor Markets: A Study in Agent-Based Computational Economics," Staff General Research Papers Archive 2048, Iowa State University, Department of Economics.
    2. John M. Abowd & Francis Kramarz & David N. Margolis, 1999. "High Wage Workers and High Wage Firms," Econometrica, Econometric Society, vol. 67(2), pages 251-334, March.
    3. Piscitelli, Laura & Cross, Rod & Grinfeld, Michael & Lamba, Harbir, 2000. "A Test for Strong Hysteresis," Computational Economics, Springer;Society for Computational Economics, vol. 15(1-2), pages 59-78, April.
    4. Roth, Alvin E. & Sotomayor, Marilda, 1992. "Two-sided matching," Handbook of Game Theory with Economic Applications,in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 16, pages 485-541 Elsevier.
    5. Olivier J. Blanchard & Lawrence H. Summers, 1986. "Hysteresis and the European Unemployment Problem," NBER Chapters,in: NBER Macroeconomics Annual 1986, Volume 1, pages 15-90 National Bureau of Economic Research, Inc.
    6. McFadzean, David & Tesfatsion, Leigh, 1999. "A C++ Platform for the Evolution of Trade Networks," Computational Economics, Springer;Society for Computational Economics, vol. 14(1-2), pages 109-134, October.
    7. Leigh TESFATSION, 1995. "How Economists Can Get Alife," Economic Report 37, Iowa State University Department of Economics.
    8. Leigh Tesfatsion, 2002. "Agent-Based Computational Economics," Computational Economics 0203001, EconWPA, revised 15 Aug 2002.
    9. Diamond, Peter A, 1982. "Aggregate Demand Management in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 881-894, October.
    10. Leigh TESFATSION, 1995. "A Trade Network Game With Endogenous Partner Selection," Economic Report 36, Iowa State University Department of Economics.
    11. Matthew Rabin & Joel L. Schrag, 1999. "First Impressions Matter: A Model of Confirmatory Bias," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 37-82.
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    Cited by:

    1. Klos, Tomas B., 1999. "Governance and matching," Research Report 99B41, University of Groningen, Research Institute SOM (Systems, Organisations and Management).

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