INFORMATION SHARING IN UNION–FIRM RELATIONSHIPS* |
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| Authors: | Anthony Creane Carl Davidson |
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| Institution: | 1. Department of Economics, Michigan State University, USA;2. Department of Economics, Michigan State University and GEP, University of Nottingham, UK;3. We thank Keith Crocker, Larry Martin, Larry Samuelson, three anonymous referees, and the editor for extremely helpful comments and suggestions on an earlier version of this paper. Please address correspondence to: Carl Davidson, Department of Economics, Michigan State University, 110 Marshall‐Adams Hall, East Lansing, MI 48824‐1038, U.S.A. Phone: 517‐355‐7756. Fax: 517‐432‐1068. E‐mail: . |
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| Abstract: | Large firms often negotiate wage rates with labor unions. When they do, an ex ante agreement to share information should make it more likely that they will reach an agreement and capture the gains from trade. However, if the firm refuses to share information, the union may shade down its wage demand to increase the probability of acceptance. This reduction in the wage can increase the joint surplus of the agents and increase social welfare. As a result, there are some circumstances in which bargaining with incomplete information can be better for the agents and society than bargaining with complete information. |
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