The Choice of the Agenda in Labor Negotiations: Efficiency and Behavioral Considerations
University of Erfurt; Institute for the Study of Labor (IZA)
National Center for Scientific Research (CNRS) - Institute of Economic Theory and Analysis (GATE); Institute for the Study of Labor (IZA)
IZA Discussion Paper No. 1762
GATE Working Paper No. 05-08
The labor economics literature has shown that the "efficient bargaining" model, in which wage and employment are negotiated simultaneously, is less frequently used on unionized markets than the less efficient "right-to-manage" model, in which wage is determined via bargaining and employment determined subsequently and unilaterally by the firm. This paper reports an experiment in which the choice of the bargaining agenda is endogenous within a noncooperative game. We find that participants show a preference for decision authority and choose single-issue bargaining in most cases even though efficiency is lower than in multi-issue bargaining. Furthermore, multi-issue bargaining induces unions to offer smaller payoff shares and leads to a higher conflict rate than in a single-issue bargaining.
Number of Pages in PDF File: 37
Keywords: bargaining agenda, efficient contracts, right-to-manage, decision authority, experiments
JEL Classification: C72, C78, C91, J51, J53working papers series
Date posted: October 15, 2005
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