Regret and Jubilation in Union Wage Bargaining

Michael Beenstock ()

No 170, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: A theoretical model of collective wage bargaining is developed in which unions set wages and employers decide employment. A novel feature of the model is that the conventional expected utility calculus is replaced by one in which regret from failed wage bargains and jubilation from successful ones influence decision-making under uncertainty. This gives rise to a series of wage bargaining rounds in which collectively determined wage rates rise and employment falls. This dynamic behaviour is not implied by conventional analyses.

Keywords: Collective Bargaining; Jubilation Effect; Labour Markets; Regret Effects; Unions; Utilitarian Assumption; Wages (search for similar items in EconPapers)
Date: 1987-03
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Journal Article: Regret and Jubilation in Union Wage Bargaining (1988)
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