PETER G. GAHAN, Monash University - Department of Management
Email: peter.gahan@buseco.monash.edu.au

Highly formalized models of union behaviour have been developed and are widely used within neo-classical economics. This approach is justified by the argument that most goals pursued by unions can be reduced to a wage (or wage-equivalent) - employment trade-off. However, the strong assumptions made about union goals and preferences, how these are determined and the range of issues over which a union will seek to bargain with a firm are not supported by extensive empirical evidence.

This paper explores these issues through a survey of union leaders to ascertain the range of union goals and their preferences, and the types of issues over which unions bargain with employers. The results of the survey present convincing evidence that standard neo-classical models do not adequately capture union bargaining behavior, or union goals and preferences. The findings presented here also throw open, but do not resolve, the question of whether unions are 'rational maximisers'. The most interesting result - not widely found within the economics or industrial relations literature - concerns the nature of union bargaining preferences. Union bargaining over employment appears to be asymmetric around current levels of employment in that union appear to care more about the employment implications of their bargaining strategies, when they are likely to result in employment decreases.

JOERG OECHSSLER, University of Heidelberg - Alfred Weber Institute for Economics
Email: oechssler@uni-hd.de
ANDREAS ROIDER, University of Bonn - Economic Science Area, Institute for the Study of Labor (IZA)
Email: roider@uni-bonn.de
PATRICK W. SCHMITZ, University of Cologne, Centre for Economic Policy Research (CEPR)
Email: patrick.schmitz@uni-koeln.de

Negotiations frequently end in conflict after one party rejects a final offer. In a large-scale internet experiment we investigate whether a 24-hour cooling-off period leads to fewer rejections in ultimatum bargaining. We conduct a standard cash treatment and a lottery treatment, where subjects received lottery tickets for several large prizes - emulating a high-stakes environment. In the lottery treatment, unfair offers are less frequently rejected, and cooling-off significantly reduces the rejection rate further. In the cash treatment, rejections are more frequent and remain so after cooling-off. This treatment difference is particularly pronounced for subjects with lower cognitive abilities.

DANIEL DRUCKMAN, University of Queensland (Brisbane) - Australian Centre for Peace and Conflict Studies, George Mason University - Department of Public & International Affairs
Email: dandruckman@yahoo.com
MARA OLEKALNS, University of Melbourne - Melbourne Business School
Email: m.olekalns@mbs.edu
PHILIP SMITH, University of Melbourne - Department of Psychology
Email: philipls@unimelb.edu.au

A number of studies have shown that certain events that occur during a negotiation can alter its course. Referred to as turning points, these events are precipitated by actions taken either outside or inside the talks, having consequences for outcomes. This article reports the results of two experiments designed to examine the impacts of both types of precipitating actions. Focusing on external actions, the first experiment showed that crises - as opposed to breakthroughs - produced more agreements in the context of positive social climates (high trust, low power). Fewer agreements were achieved in negative social climates (low trust, high power). Focusing on internal actions, the second experiment showed that more cooperative precipitants (factors inducing change) were identified in positive social climates. Outcomes were also influenced by the climate: Positive climates - high trust, cooperate orientations - resulted in more agreements. In both experiments, the social climate mediated the effects of precipitating factors on negotiation outcomes. Perceptions of trust and power filter the way negotiators interpret actions that occur outside or are taken inside a negotiation, leading to agreements or impasses.