Strike Ballots as a Commitment Device

The consequences of strike ballots are analysed in a non-cooperative model of negotiations between a union and a firm over wage increases. The firm possesses private information about its revenues. The union can only stop the firm from rejecting wage demands if a refusal is costly, due to a strike. However, under plausible assumptions, strike threats are empty. Ballots will make strike threats credible if they provide sufficient commitment. For this effect to occur, the timing of voting is of crucial importance. If the legislator makes strike ballots compulsory, disputes can become more likely. Finally, principles of optimal majority rules for ballots are dreived.