Commitment and strikes in wage bargaining |
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| Affiliation: | 1. Institute of Industrial Economics, The Chinese Academy of Social Sciences, No. 2 Yuetan Beixiaojie, Xicheng District, 100836 Beijing, China.;2. International Business School Suzhou, Xi''an Jiaotong-Liverpool University, 111 Ren''ai Road, Dushu Lake Higher Education Town, Suzhou, China.;3. National Institute of International Strategy, Chinese Academy of Social Sciences, No.3 Zhangzizhong Road, Beijing 100007, China;1. Osaka University, 2-1 Yamada-oka, Suita Osaka, Japan;2. West Japan Railway Company, 2-4-24 Shibata Kita-ku, Osaka, Japan;3. Osaka University, 2-1 Yamada-oka, Suita Osaka, Japan |
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| Abstract: | This paper analyzes the long-run strategic relationship between a firm and a union as a repeated bargaining game, where there is incomplete information on the player's motivation on both sides and each party has a fall-back position. The firm and the union will engage in a reputation-building activity, that will produce a limited number of strikes over time. The bargainer that succeeds in building up a reputation for toughness and obtains a favorable payoff in the long-run is, either the more patient (or alternatively the more centralized), or the party with a higher initial probability of stubbornness, or the party with a smaller fall-back position. Our model also offers predictions on the dependence of strike incidence over time on several parameters. |
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