From Dictator Game to Ultimatum Game . . . And Back Again: The Judicial Impasse Amendments
University of Pennsylvania Journal of Labor and Employment Law, Vol. 6, 2004
54 Pages Posted: 6 Apr 2004
In 1935, Congress decided to replace the dictator game that had long been used to set working conditions with an ultimatum game by enacting the National Labor Relations Act (NLRA). A dictator game is a two-player game in which player one proposes a division of resources, and player two can do nothing but accept the offer. Economic theory predicts that in such a case, player one will offer nothing to player two, and this is indeed the most common offer. Before the NLRA was enacted the law allowed player two, a/k/a the employer to offer terms, and player two, a/k/a the employee, had to accept the offer that was dictated by the employer. The NLRA was enacted to change this balance of power and create a system of wage setting that would better support the institutions of a democracy, essentially replacing a dictator game with an ultimatum game. However, certain judicial decisions have amended the NLRA to take away the right of employees to engage in meaningful collective bargaining. These judicial impasse doctrines have been created without regard to how they would affect the range of policies Congress set out in Section 1, especially promoting collective bargaining and equality of bargaining power. Indeed, since the 1980's, the breadth of revision by the least democratic branch of government and the implications of this process has been breathtaking and has so transformed private sector wage setting so as to return wage setting to a dictator game. This article focuses on how the judicial impasse doctrines that allow employers to implement their final offers at impasse, lock out employees, replace strikers, and displace locked out workers operate to rebalance labor power and reinstate the pre-NLRA dictator game.
Keywords: Labor law
JEL Classification: J5, K31, K41
Suggested Citation: Suggested Citation