The Optimal Use of Information, Collective Bargaining, and the Disclosure Debate

Abstract

It is commonly believed that trade unions act irrationally in collective bargaining either by “picking numbers out of the air” or by forming biased forecasts of information. Such views either imply that information disclosure to unions is useless or that discretionary disclosure could confer an advantage on management. This article presents an alternative model of unions which relies on expectations being formed rationally and based on the optimal use of information.