Striking for a Bargain Between Two Completely Informed Agents / Raquel Fernandez, Jacob Glazer.

Format:

Book

Author/Creator:

Fernandez, Raquel.

Contributor:

National Bureau of Economic Research.

Glazer, Jacob.

Series:

Working Paper Series (National Bureau of Economic Research) no. w3108.

NBER working paper series no. w3108

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1989.

Summary:

This paper models the wage-contract negotiation procedure between a union and a firm as a sequential bargaining process in which the union

also decides, in each period, whether or not to strike for the duration of that period. We show that there exist subgame-perfect equilibria in which the union engages in several periods of strikes prior to reaching a final agreement, although both parties are completely rational and fully informed. This has implications for other inefficient phenomena such as tariff wars, debt negotiations, and wars in general. We characterize the set of equilibria, show that strikes can occur in real time, and discuss extensions of the model such as lockouts and the possibility of multiple recontracting opportunities.

Notes:

Print version record

September 1989.