Abstract: | Labor contracts are repeated, and the current negotiation apparently affects negotiations on the next contract. There is evidence that the likelihood of a strike is influenced by what happened before the previous contract was signed. To analyze whether private information might explain this, a model of negotiations between a buyer and a seller is developed where the “pie” in each contract follows a Markov chain, with transitions observed privately by the buyer. Each negotiation is a sequence of offers by the seller; the buyer can only accept or reject each offer, and a contract is signed when the buyer accepts. |