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Intra Firm Bargaining and Shapley Values

Björn Brügemann, Pieter Gautier () and Guido Menzio ()
Authors registered in the RePEc Author Service: Bjoern A. Bruegemann ()

No 10794, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The paper revisits the problem of wage bargaining between a firm and multiple workers. We show that the Subgame Perfect Equilibrium of the extensive-form game proposed by Stole and Zwiebel (1996a) does not imply a profile of wages and profits that coincides with the Shapley values as claimed in their classic paper. We propose an alternative extensive-form bargaining game, the Rolodex Game, that follows a simple and realistic protocol and that, under some mild restrictions, admits a unique Subgame Perfect Equilibrium generating a profile of wages and profits that are equal to the Shapley values. The vast applied literature that refers to the Stole and Zwiebel game to give a game-theoretic foundation to the use of the Shapley values as the outcome of the bargain between a firm and multiple workers should instead refer to the Rolodex game.

Keywords: intra firm bargaining; Shapley value (search for similar items in EconPapers)
JEL-codes: D21 J30 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth and nep-mic
Date: 2015-08
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Related works:
Working Paper: Intra Firm Bargaining and Shapley Values (2018) Downloads
Working Paper: Intra Firm Bargaining and Shapley Values (2016) Downloads
Working Paper: Intra Firm Bargaining and Shapley Values (2015) Downloads
Working Paper: Intra Firm Bargaining and Shapley Values (2015) Downloads
Working Paper: Intra Firm Bargaining and Shapley Values (2015) Downloads
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