Strategic bargaining models and interpretation of strike data

Kennan, John; Wilson, Robert B.

doi:10.1002/jae.3950040506

Cited by 157 publications

(95 citation statements)

References 48 publications

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“…Bargainers possess private information about factors such as their alternatives to negotiated agreements and costs to delay, causing them to be mutually uncertain about the other side's reservation value. Uncertainty produces impasse because bargainers use costly delays to signal to the other party information about their own reservation value (Kennan and Wilson, 1989; Cramton, 1992). However, this account of impasse is difficult to test because satisfactory measures of uncertainty are rare.…”

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confidence: 99%

Explaining Bargaining Impasse: The Role of Self-Serving Biases

Babcock

Loewenstein

1997

Journal of Economic Perspectives

910

335

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A major unsolved riddle facing the social sciences is the cause of impasse in negotiations. The consequences of impasse are evident in the amount of private and public resources spent on civil litigation, the costs of labor unrest, the psychic and pecuniary wounds of domestic strife, and in clashes among religious, ethnic and regional groups. Impasses in these settings are not only pernicious, but somewhat paradoxical since negotiations typically unfold over long periods of time, offering ample opportunities for interaction between the parties.Economists, and more specifically game theorists, typically attribute delays in settlement to incomplete information. Bargainers possess private information about factors such as their alternatives to negotiated agreements and costs to delay, causing them to be mutually uncertain about the other side's reservation value. Uncertainty produces impasse because bargainers use costly delays to signal to the other party information about their own reservation value (Kennan and Wilson, 1989; Cramton, 1992). However, this account of impasse is difficult to test because satisfactory measures of uncertainty are rare. With only a few exceptions (Tracy, 1986(Tracy, , 1987, most field research in this area has been limited to testing secondary hypotheses, such as the relationship between wages and strike duration (

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mentioning

confidence: 99%

Explaining Bargaining Impasse: The Role of Self-Serving Biases

Babcock

Loewenstein

1997

Journal of Economic Perspectives

910

335

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“…This result is in sharp contrast to the results of discounting models, where the bargaining continues until the traders are convinced that gains are not possible. 1.Reviews of the literature appear in Binmore, Osborne, and Rubinstein 1991, Kennan and Wilson 1989, and Osborne and Rubinstein 1990. 2.Samuelson 1984and Vincent 1989 provide exceptions where termination can occur because the uninformed buyer is exposed to adverse selection arising from correlation in the traders' valuations.…”

Section: Introductionmentioning

confidence: 99%

Dynamic Bargaining with Transaction Costs

Cramton

1991

Management Science

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A buyer and seller alternate making offers until an offer is accepted or someone terminates negotiations. The seller's valuation is common knowledge, but the buyer's valuation is known only by the buyer. Impatience to reach an agreement comes from two sources: the traders discount future payoffs and there are transaction costs of bargaining. Equilibrium behavior involves either immediate trade, delayed trade, or immediate termination, depending on the size of the gains from trade and the relative bargaining costs. This contrasts with the pure discounting model where termination never occurs, and the pure transaction cost model where delayed trade never occurs.

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“…Modern theoretical models of strikes (see e.g. Kennan & Wilson, 1989, 1990 are in line with this reasoning: Strikes serve as screening devices to extract private information (regarding profits, strike funds, willingness to strike of the work force etc.) of the opponent.…”

Section: Introductionmentioning

confidence: 90%

Strike Activity and Centralisation in Wage Setting

Ludsteck¹,

Jacobebbinghaus²

2010

Der Kampf Um Arbeit

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Auch mit seiner neuen Reihe "IAB-Discussion Paper" will das Forschungsinstitut der Bundesagentur für Arbeit den Dialog mit der externen Wissenschaft intensivieren. Durch die rasche Verbreitung von Forschungsergebnissen über das Internet soll noch vor Drucklegung Kritik angeregt und Qualität gesichert werden.Also with its new series "IAB Discussion Paper" the research institute of the German Federal Employment Agency wants to intensify dialogue with external science. By the rapid spreading of research results via Internet still before printing criticism shall be stimulated and quality shall be ensured. Strike Activity and Centralisation in Wage SettingJohannes AbstractWe test the theoretical claim that coordination and centralisation in wage setting reduce strike activity by estimating nonlinear regression models using a dataset of 17 OECD countries for the period 1972-2000. We find moderating effects of coordination on strike activity but the effects are not stable over time. Several means are employed to check for the robustness of our results. We compute bootstrapped standard errors, conduct nonlinear median regressions. A remaining problem of the study is that we cannot control completely for country-specific heterogeneity in the estimates of coordination and centralisation effects.

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Strategic bargaining models and interpretation of strike data

Cited by 157 publications

References 48 publications

Explaining Bargaining Impasse: The Role of Self-Serving Biases

Explaining Bargaining Impasse: The Role of Self-Serving Biases

Dynamic Bargaining with Transaction Costs

Strike Activity and Centralisation in Wage Setting

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