Bargaining Outcomes Research Articles

Communication in bargaining games with unanimity

Communication has been shown to increase proposer power in multilateral bargaining settings that use majority voting rule via competition between non-proposers for a place in the coalition. In this paper we investigate whether communication affects bargaining outcomes and the bargaining process in settings in which the competition effect is not present. We study committees that use unanimity rule to pass allocations. We find that in these settings, communication has the complete opposite effect compared with the majority settings: under unanimity, communication eliminates the inefficiencies that are present in settings without communication and it shifts bargaining outcomes towards egalitarian allocations with no proposer power. Communication logs provide insights regarding the topics subjects discuss and communication content correlates with bargaining outcomes.

Pledge-and-Review Bargaining

Real-world negotiations differ fundamentally from existing bargaining theory. Inspired by the Paris Agreement on climate change, this paper develops a novel bargaining game in which each party quantities its own contribution (to a public good, for example), before the set of pledges must be accepted. I first show that, if the tolerance for delay is uncertain, each equilibrium pledge coincides with an asymmetric Nash bargaining solution. The weights placed on others. payouts reflect the underlying uncertainty, but they vary from pledge to pledge, so the set of equilibrium pledges is inefficient. This bargaining outcome is embedded in a dynamic contribution game, with endogenous technology, participation, enforcement, and contract terms, to investigate when pledge-and-review bargaining is desirable. The model’s predictions can rationalize the key differences between the climate agreements signed in Kyoto (1997) and Paris (2015) as well as the development from the former to the latter.

Peer Bargaining and Productivity in Teams: Gender and the Inequitable Division of Pay

Problem description: A recent trend in personnel operations is to reduce hierarchy and allow employee teams to self-manage tasks, responsibilities, and rewards. Yet we know little about how this arrangement relates to worker productivity and fairness. Academic/Practical relevance: We provide the first firm-based evidence that when service teams are allowed to internally allocate compensation, the ensuing peer bargaining process can generate inequitable outcomes for women. Methodology: We demonstrate this using fixed effect models to identify productivity and peer bargaining traits in 932 workers at 32 large Chinese beauty salons. We measure individual productivity through service and prepaid card sales and measure bargaining through the division of team-based commissions. We also build a parsimonious bargaining model to explain our empirical results. Results: Although productivity and bargaining outcomes are positively correlated, female workers consistently receive bargaining outcomes below their productivity level, while men are consistently overcompensated. Importantly, we provide evidence that our results can only be explained by a combination of higher prosociality and lower bargaining power in women. We also demonstrate that the resulting inequity is positively correlated with shorter tenure. Managerial Implications: Our findings provide unique organizational evidence on how bargaining among peers relates to productivity in service operations. We show that the discriminatory social dynamics observed throughout society are evident in operational designs that delegate decision rights to teams, and that the magnitude in these systems is at least as large as those observed in traditional hierarchical pay systems. Managers must anticipate and mitigate this gender-based inequity because it is in and of itself an operational performance issue, and because of the myriad of productivity, retention, and ethical implications that can result from peer-based bargaining.

Understanding Human Actions and Institutional Change: What Are the Impacts of Power Asymmetries on Efficiency in Pasture Use?

The paper investigates actions and decisions of agricultural resource users and explores their implications for institutional change and natural resource management in the post-socialist context of Central Asia. More specifically, the authors propose a novel methodological approach for the aforementioned context to support policy-relevant research that explicitly addresses behavioral responses of pastoralists in Kyrgyzstan. The paper builds on distributive and economic theories of institutional change and combines findings from lab and field framed economic experiments with complementary qualitative methods (questionnaires, group discussions and semi-structured interviews). By these means the authors test the impact of a specific variable on institutional change in pasture use: the role of power and specifically the difference in the ability of players to “survive” in a bargaining game without an agreement. The impact of power asymmetries and its implications for cooperation and the efficiency of bargaining outcomes are discussed and analyzed. Experimental results largely confirm findings reported in the literature: as players learn about the game and the behavior of others, they adjust their decisions accordingly; the subjects also exhibit other-regarding preferences, resulting to the prevalence of relatively equally distributed gains as an outcome. Furthermore, the findings of the study suggest that under the condition of incomplete information about the preferences of other players, the experimental subjects internalize the game as a group. The authors propose that an explanatory variable for such situations might be that actual shared beliefs of pasture users assist players to economize on information processing and coordinate the bargaining in an effective way. From this perspective, the paper raises a series of questions regarding the proposition that power asymmetry leads to inefficient bargaining outcomes, and provides some first insights for further investigation.

European Economic Governance And Its Impact On The Collective Bargaining System: The Italian Case

The new economic governance has pursued a radical decentralisation of collective bargaining. The European system of economic policies represents a new model that can be described as new European interventionism and marks a paradigm change in the EU’s approach to collective bargaining to direct political intervention in national bargaining outcomes and procedures. The European economic governance pressure was very clearly on Italy, where the industrial relations system is strongly under pressure, since the “secret” letter sent from the ECB to Italy on August 5th, 2011, which immediately influenced both Italian legislator and social parties. This paper focuses on the trends of the Italian firm-level bargaining system from the perspective of the subjects who negotiate and the agreements’ effectiveness. In relation to the subjects, in Italy this pressure resulted in the adoption of the majority principle. From another point of view, in Italy, until the end of last century, the national-level collective agreement seemed to be ‘inviolable’, inserted as it was in a context of absolute centrality. If this was the traditional approach, in recent years the Italian system has experienced a shift away from the model, where the legal support has been combined with a ‘deconstruction’ of collective regulation. Here we will briefly consider these more recent dynamics, in particular by the intervention made by the Italian legislator with the so-called economic manoeuvre of August 2011 (Legislative Decree No. 138/2011, converted by Law No. 148/2011), which, in a framework of progressive fragmentation of labour relations, changed traditional attitudes.

Varieties of workplace dualisation: a study of agency work in the German automotive industry

AbstractThis article investigates the variation in workplace arrangements on agency work across four German automotive plants. The plants differ in terms of the proportion of agency workers, the length of their assignment, their function and their wage level compared with the permanent workforce. The article explores how the interaction between national‐level deregulation, workplace power resources and the local political and economic context affects the bargaining outcomes achieved by works councils. Findings rely on interviews with human resource managers and labour representatives at workplace and sectoral level.

Private Labels and Retailer Profitability: Bilateral Bargaining in the Grocery Channel

We examine the role of store branded products in determining bargaining outcomes between retailers and manufacturers in the single-serve brew-at-home coffee category. Exploiting a novel setting in which the dominant, single-serve technology was protected by a patent that prevented private label entry, we develop a structural model of demand and supply-side bargaining and seek to quantify the impact of private labels on retailer profits. To quantify the benefits of private label introduction, we decompose their impact into the direct profits (from adding an additional product) and the bargaining benefit on branded products (from increasing retailer's bargaining leverage), netting out the business stealing effects on incumbent branded products. We find that bargaining outcomes are driven primarily by bargaining leverage, while bargaining ability is relatively symmetric between retailer and manufacturer. Moreover, the impact of bargaining leverage is substantial: increased bargaining leverage accounts for roughly 20% of the overall benefit of private label introduction, which is itself on the order of 10% of pre-introduction profits. Finally, we find that private labels are beneficial to all retailers, but some retailers gain much more than others.

Strategic formation of homogeneous bargaining networks

We study a model of strategic network formation prior to a Manea (2011a) bargaining game: ex ante homogeneous players form costly undirected links, anticipating expected equilibrium payoffs from the subsequent bargaining game. Assuming patient players, we provide a complete characterization of generically pairwise stable networks: specific unions of separated pairs, odd circles, and isolated players constitute this class. We also show that many other structures, such as larger trees or unbalanced bipartite networks, cannot be pairwise stable at all. The analysis implies that the diversity of possible bargaining outcomes is small in (generically) pairwise stable networks.

Winning Conditions of Precarious Workers’ Struggles: A Reflection Based on Case Studies from South Korea

In South Korea, many struggles of non-regular workers, who attempted to organize their unions and engage in militant action to protest against employers’ inhumane discrimination and illegal exclusion, have failed to achieve the desired outcomes, due to their vulnerable employment status and their lack of action resources. In this light, our study examines the conditions that lead to victory in precarious workers’ struggles, by focusing on three attributes: internal solidarity with regular workers, external solidarity from labour and civil society groups outside the workplace, and mobilized protest repertoires. Specifically, this study seeks to identify the configurations of these three conditions that produce successful outcomes in precarious workers’ struggles, in terms of bargaining gains and organizational sustainability. We do this by employing fs/QCA modelling to examine 30 major cases of non-regular worker struggles occurring over a 16-year period from 1998 to 2013. Our analysis presents the finding that the conditional configuration of strong external solidarity, strong internal solidarity, and fewer struggle repertoires constitutes a significant causal path to successful outcomes. This reaffirms the idea that strong solidarity bridging, whether with regular workers that have a different employment status in the segmented workplace, or with labour and civil society groups outside the workplace, is the crucial causal condition for precarious workers to achieve their desired outcomes from struggle. An unexpected finding, however, is that when precarious worker struggles mobilize fewer struggle repertoires, they are likely to achieve the successful outcomes of bargaining and organizational gains. Our study contributes to the theoretical elaboration of labour movement revitalization for the precariat class, by shedding light on the activism of precarious workers, considering that the English-language literature that pays attention to the active role of such atypical workers in staging protests against employers’ inhumane treatments and the neoliberal labour regime is limited.

Issue linkage across international organizations: Does European countries’ temporary membership in the UN Security Council increase their receipts from the EU budget?

What explains the outcome of interstate negotiations in international organizations (IOs)? While existing research highlights member states’ power, preference intensity, and the IO’s institutional design, this paper introduces an additional source of bargaining power in IOs: Through issue linkage members of an IO leverage privileged positions in other IOs to obtain more favorable bargaining outcomes. Specifically, European Union members are more successful in bargaining over the EU budget while they hold a non-permanent seat on the United Nations Security Council (UNSC). Inside the UNSC EU members can promote security interests of other European countries, and they can use their influence to secure side-payments from the EU budget. The study tests this argument by investigating new EU budget data, and it shows that EU members obtain 1.7 billion Euro in additional net receipts during a two-year UNSC term, on average. Thus, bargaining processes in the EU and the UN are intricately linked.

The Impact of Previous Action on Bargaining—An Experiment on the Emergence of Preferences for Fairness Norms

The communication of participants to identify an acceptable bargaining outcome in the Nash bargaining game is all about fairness norms. Participants introduce fairness norms which yield a better outcome for themselves in order to convince the other participant of their bargaining proposal. Typically, these fairness norms are in line with theoretical predictions, which support a wide variety of different but fair outcomes the participants can choose from. In this experiment, we play two treatments of the Nash bargaining game: in one treatment, the participants play a dictator game prior to bargaining, and in the other treatment they do not. We find that participants who have not played the dictator game intensively discuss the outcome of the game and come to solutions closer to the equal split of the pie the longer they chat. This effect vanishes as soon as the participants have previous experience from a dictator game: instead of chatting, they establish the fairness norm introduced in the dictator game. Remarkably, if the dictator is unfair in the dictator game, he also gets a higher share of the pie in the Nash bargaining game.

Economic Dispatch with Demand Response in Smart Grid: Bargaining Model and Solutions

This paper proposes an economic dispatch strategy for the electricity system with one generation company, multiple utility companies and multiple consumers, which participate in demand response to keep the electricity real-time balance. In the wholesale markets, multiple utility companies will commonly select a reliable agent to negotiate with the generation company on the wholesale price. It is challengeable to find a wholesale price to run the electricity market fairly and effectively. In this study, we use the multiple utility companies’ profits to denote the utility function of the agent and formulate the interaction between the agent and the generation company as a bargaining problem, where the wholesale price was enforced in the bargaining outcome. Then, the Raiffa–Kalai–Smorodinsky bargaining solution (RBS) was utilized to achieve the fair and optimal outcome. In the retail markets, the unfavorable disturbances exist in the power management and price when the consumers participate in the demand response to keep the electricity real-time balance, which motivates us to further consider the dynamic power management algorithm with the additive disturbances, and then obtain the optimal power consumption and optimal retail price. Based on the consumers’ utility maximization, we establish a price regulation model with price feedback in the electricity retail markets, and then use the iterative algorithm to solve the optimal retail price and the consumer’s optimal power consumption. Hence, the input-to-state stability condition with additive electricity measurement disturbance and price disturbance is given. Numerical results demonstrate the effectiveness of the economic dispatch strategy.

Energy performance certificates in the Turin real estate market

PurposeThe purpose of this paper is to assess the impact of the Energy Performance Certificate (EPC) on the Italian real estate market, focusing on old buildings. The contribution of EPC labels to house prices and to market liquidity was measured to analyze different aspects of the selling process.Design/methodology/approachA traditional hedonic model was used to explain the variables of listing price, transaction price, time on the market and bargaining outcome. In addition to EPC labels, the building construction period and the main features of apartments were included in the model. A sample of 879 transactions of old properties in Turin in 2011-2014 was considered.FindingsA first hedonic model let us suppose that low EPC labels (E, F and G) were priced in the market although EPC labels explained only 6-8 per cent of price variation. A second full hedonic model, which included apartment characteristics, revealed that EPC labels had no impact on prices.Originality/valueIn Italy EPC has been mandatory for house transactions since 2009, so there are few studies on the effect of EPC on the Italian real estate market at least to our knowledge. Furthermore, unusually for the Italian context, in this paper also transaction prices were analyzed, in addition to the more frequently used listing prices.

Politically induced regulatory risk and independent regulatory agencies

Uncertainty in election outcomes generates politically induced regulatory risk. For monopoly regulation, political parties’ risk attitudes towards such risk depend on a fluctuation effect that hurts both parties and an output–expansion effect that benefits at least one party. Irrespective of the parties’ risk attitudes, political parties have incentives to negotiate away regulatory risk by pre-electoral bargaining. Pareto-efficient bargaining outcomes fully eliminate regulatory risk and are attainable through institutionalizing independent regulatory agencies with a specific objective. Key aspects of the regulatory overhaul of the US Postal system in 1970 are argued to be consistent with these results.

Hospital systems and bargaining power: evidence from out‐of‐market acquisitions

Analyses of hospital mergers typically focus on acquisitions that alter local market concentration. However, as prices are negotiated between hospital systems and insurers, this focus may overlook the impact of cross‐market interdependence in the bargaining outcome. Using data on out‐of‐market acquisitions occurring across the United States from 2000–2010, we investigate the impact of cross‐market dependencies on negotiated prices. We find that prices at hospitals acquired by out‐of‐market systems increase by about 17% more than unacquired, stand‐alone hospitals and confirm that out‐of‐market mergers result in a relaxation of competition, the prices of nearby competitors to acquired hospitals increase by around 8%.

BARGAINING AMONG FARMERS, GOODWILL, AND THE SUCCESS OF COOPERATIVES

ABSTRACTA model of concessional bargaining among farmers explains the success (or lack thereof) of cooperative institutions in rural farm settings in the developing regions. Concessional bargaining in day‐to‐day interactions generates goodwill, which helps smoothen future dealings amongst farmers as well as with outside agents. In particular, we model the existence of goodwill amongst farmers as enhancing their ability to collectively bargain with an outside dealer that buys their farm produce. Results suggest that when dealing with each other, farmers offer higher concessions when the risk of loss or reversal in bargaining power is high; however, the level of concession is also influenced by the degree of reciprocity and parameters that affect bargaining surplus. Findings provide further insights over the success of cooperative institutions in rural farm settings where inter‐farmer goodwill dynamics determines the cooperative's bargaining outcomes. Specifically, when farmers generously reciprocate each other's goodwill gestures, it leads to better outcomes through increasing their cooperative reservation price. In contrast, when the degree of reciprocity is lower, or when the risk of bargaining power switching is higher, farmers extract more surplus from other farmers, and this also lowers the cooperative's bargaining outcomes and makes the cooperative arrangement unviable in the long term.

Efficient stabilization of cooperative matching games

Cooperative matching games have drawn much interest partly because of the connection with bargaining solutions in the networking environment. However, it is not always guaranteed that a network under investigation gives rise to a stable bargaining outcome. To address this issue, we consider a modification process, called stabilization, that yields a network with stable outcomes, where the modification should be as small as possible. Therefore, the problem is cast to a combinatorial-optimization problem in a graph. Recently, the stabilization by edge removal was shown to be NP-hard. On the contrary, in this paper, we show that other possible ways of stabilization, namely, edge addition, vertex removal and vertex addition, are all polynomial-time solvable. Thus, we obtain a complete complexity-theoretic classification of the natural four variants of the network stabilization problem. We further study weighted variants and prove that the variants for edge addition and vertex removal are NP-hard.

Financial position and house price determination: An empirical study of income and wealth effects

This paper examines the effect of the relative financial position of buyers and sellers on house prices, distinguishing between income and wealth effects. Using administrative data from the Netherlands (2006–2010) that combine transaction data, house characteristics, and household characteristics of both buyers and sellers, the estimates indicate that a better financial position leads to higher prices for buyers and lower prices for sellers. It provides evidence that income and wealth influence housing market behavior of buyers and sellers. The results are consistent with theories that suggests that higher income and wealth lead to higher search and bargaining costs, implying that households with better financial positions invest less time and effort in search and bargaining leading to worse bargaining outcomes.

Collective Bargaining on Employment Security: The Influence of the Legal Framework

Employers’ organisations and trade unions (also called the social partners) are given a central role to play in the specification of employment security into concrete regulations through collective bargaining. The question is how employment security can be implemented through collective bargaining. This contribution builds on the assumption that collective bargaining outcomes are influenced by inter alia political, socio-economic, and legal constrains. The article seeks to explore the legal framework of collective bargaining in which employment security is (to be) developed and to point out the ways in which this framework can have an effect on employment security and the way it is being shaped.

Disability and Economy: A Game Theoretic Approach

This paper takes a game theoretic approach to disability-related issues by constructing a model that studies the case of hereditary deafness on Martha’s Vineyard Island, USA from the seventeenth century to the early years of twentieth, where the island community adjusted itself to the hereditary deafness so that it was not treated as a disability. The model of the present paper has two stages. First of all, there are two types of continua of agents, the deaf and the non-deaf. In the first stage, the non-deaf agents become either bilinguals or monolinguals. In the second stage, agents are classified into deaf people, bilinguals and monolinguals. They are then randomly matched to form a trio to play a three-person bargaining game with infinite horizon, random proposers and language constraints. Two bargaining games are considered. The first one is a majority bargaining game where only two out of three can agree to implement a bargaining outcome. The second one is a unanimity bargaining game where all three agents are required to reach an agreement. The majority game exhibits strategic complementarity, while the unanimity game exhibits strategic substitutability. This paper also takes an inductive approach to examine how prejudice against people with disability may emerge.