On equilibrium payoffs in wage bargaining with discount rates varying in time

Ahmet Ozkardas () and Agnieszka Rusinowska
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Ahmet Ozkardas: Turgut Ozal University

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Abstract: We provide an equilibrium analysis of a wage bargaining model between a union and a firm in which the union must choose between strike and holdout in case of a disagreement. While in the literature it is assumed that the parties of wage bargaining have constant discount factors, in our model, preferences of the union and the firm are expressed by sequences of discount rates varying in time. First, we describe necessary conditions under arbitrary sequences of discount rates for the supremum of the union's payoffs and the infimum of the firm's payoffs under subgame perfect equilibrium in all periods when the given party makes an offer. Then, we determine the equilibrium payoffs for particular cases of sequences of discount rates varying in time. Besides deriving the exact bounds of equilibrium payoffs, we also characterize the equilibrium strategy profiles that support these extreme payoffs.

Keywords: Subgame perfect equilibrium; Varying discount rates; Equilibrium payoffs; Union-firm bargaining (search for similar items in EconPapers)
Date: 2015-10
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Published in Economic Theory Bulletin, 2015, 3 (2), pp.181-199. ⟨10.1007/s40505-014-0041-9⟩

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Related works:
Journal Article: On equilibrium payoffs in wage bargaining with discount rates varying in time (2015)
Working Paper: On equilibrium payoffs in wage bargaining with discount rates varying in time (2015)
Working Paper: On equilibrium payoffs in wage bargaining with discount rates varying in time (2015)
Working Paper: On equilibrium payoffs in wage bargaining with discount rates varying in time (2014)
Working Paper: On equilibrium payoffs in wage bargaining with discount rates varying in time (2014)
Working Paper: On equilibrium payoffs in wage bargaining with discount rates varying in time (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01044870

DOI: 10.1007/s40505-014-0041-9

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