Implementing endogenous inside options in Nash wage bargaining models
The Rubinstein alternating-offers game shows that the threat point in Nash wage bargaining models should be the inside, instead of the outside, option. We provide a new way to implement inside options by explicitly modeling a utilitarian union's strike payoff. The solution to the dynamic bargaining system resulting from the endogeneity of the inside option can serve as a basis for richer, though still easily applicable, models of wage bargaining that are more in accordance with their game-theoretical underpinnings. The dynamics of the model also provide a theoretical justification for temporarily delayed labor market responses to policy changes.
Year of publication: |
2009
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Authors: | Knabe, Andreas |
Published in: |
Mathematical Social Sciences. - Elsevier, ISSN 0165-4896. - Vol. 57.2009, 2, p. 161-176
|
Publisher: |
Elsevier |
Keywords: | Dynamic wage bargaining Labor unions Inside options |
Saved in:
Online Resource
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