Using cross-country data, this paper investigates the relationship between workplace representation and strikes. Works councils are associated with reduced strike activity. However, where union members make up a majority of works councillors, such union-dominated councils experience greater...

We analyse the two-dimensional Nash bargaining solution (NBS) deploying a standard labour market negotiations model (McDonald and Solow, 1981). We show that the two-dimensional bargaining problem can be decomposed into two one-dimensional problems such that the two solutions together replicate...

I revisit the Rubinstein (1982) model for the classic problem of price haggling and show that bargaining can become a “trap,” where equilibrium leaves one party strictly worse off than if no transaction took place (e.g., the equilibrium price exceeds a buyer’s valuation). This arises when...

Most of the key amenities of our today jobs did not emerge in private contracts; instead, they appeared in collective agreements and regulations. I argue that understanding this observation can guide the provision of future amenities. I show that markets underprovide an amenity if workers who...

Many organizations nowadays combine profits with a social mission. This paper reveals a new hidden benefit of the mission: its role in facilitating the emergence of efficiency wages. We show that in a standard gift-exchange principals highly underestimate agents' reciprocity and, thereby, offer...

We analyze the economic consequences of strategic delegation of the right to decide between public or private provision of a governmental service and/or the authority to negotiate and renegotiate with the chosen service provider. Our model encompasses both bureaucratic delegation from a...

This paper studies the impact of hospital competition on waiting times. We use a Salop-type model, with hospitals that differ in (geographical) location and, potentially, waiting time, and two types of patients; high-benefit patients who choose between neighbouring hospitals (competitive...

A relatively high labor-intensity in government-run entities need not imply slack in their organization. Rather, it is a rational reaction to various forms of wage tax advantage that the public sector has over private firms. Even though an unequal tax treatment of public and private sectors...

This paper studies how social relationships between managers and employees affect relational incentive contracts. To this end we develop a simple dynamic principal-agent model where both players may have feelings of altruism or spite toward each other. The contract may contain two types of...