Efficiency wage effects of profit sharing are combined with option values related to stochastic future pofit variations. These option effects occur if the workers' profit share is fixed by long-term contracts. The Pareto-improving optimal level of the sharing ratio is calculated for two...

Efficiency wage effects of profit sharing are combined with option values related to stochastic future pofit variations. These option effects occur if the workers' profit share is fixed by long-term contracts. The Pareto-improving optimal level of the sharing ratio is calculated for two...

We investigate the implications of product market imperfections on profit sharing, wage negotiation and equilibrium unemployment. The optimal profit share, which the firms use as a wage-moderating commitment device, is below the bargaining power of the trade union. Intensified product market...

Many incentive contracts are inherently ambiguous, lacking an explicit mapping between performance and pay. Using an online labor market, Amazon Mechanical Turk, we study the effect of ambiguous incentives on willingness to accept contracts to do a real-effort task, the probability of completing...

We offer a unified framework to analyze the determination of employment, employee effort, wages, profit-sharing and capital structure when firms face stochastic revenue shocks. We apply a generalized Nash bargaining solution, which extends the wage bargaining literature by incorporating...

We analyze a market game where firms choose capacities under uncertainty about future market conditions and make output choices after uncertainty has unraveled. We show existence and uniqueness of equilibrium under imperfect competition and establish that capacity choices by strategic firms are...

A game-theoretic framework that allows for explicitly randomized strategies is used to study the effect of ambiguity aversion on equilibrium outcomes. The notions of "independent strategies" as well as of "common priors" are amended to render them applicable to games in which players lack...

A robust feature of models of electoral competition between two opportunistic, purely office-motivated parties is that both parties become indistinguishable in equilibrium. I this short note, I show that this strong connection between the office motivation of parties and their equilibrium choice...