The Choice of the Agenda in Labor Negotiations: Efficiency and Behavioral Considerations

IZA Discussion Paper No. 1762

GATE Working Paper No. 05-08

37 Pages Posted: 15 Oct 2005

See all articles by Manfred Königstein

Manfred Königstein

University of Erfurt

Marie Claire Villeval

Groupe d'Analyse et de Théorie Economique (GATE), CNRS; IZA Institute of Labor Economics; Global Labor Organization (GLO)

Date Written: September 2005

Abstract

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.

Keywords: bargaining agenda, efficient contracts, right-to-manage, decision authority, experiments

JEL Classification: C72, C78, C91, J51, J53

Suggested Citation

Königstein, Manfred and Villeval, Marie Claire, The Choice of the Agenda in Labor Negotiations: Efficiency and Behavioral Considerations (September 2005). IZA Discussion Paper No. 1762; GATE Working Paper No. 05-08. Available at SSRN: https://ssrn.com/abstract=822884

Manfred Königstein

University of Erfurt ( email )

Internationales Buro
Nordhaeuser Str. 63
D - 99089 Erfurt
Germany

Marie Claire Villeval (Contact Author)

Groupe d'Analyse et de Théorie Economique (GATE), CNRS ( email )

93, chemin des Mouilles
Ecully, 69130
France
+33 472 86 60 79 (Phone)
+33 472 86 60 90 (Fax)

HOME PAGE: http://www.gate.cnrs.fr/equipe/perso/villeval/villeval.html

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Global Labor Organization (GLO) ( email )

Collogne
Germany

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