Wages, Length of Relationship and Bargaining Power: An experimental study in a world of complete contracts

To explain potential sources of wage rigidity this article analyzes a model of reciprocal kindness applied to a repeated ultimatum game with changing and nonzero conflict payoffs. The model is also tested in a laboratory experiment. The results are compatible with the rentsharing approach to wage rigidity. Wages adjust to 'market pressure' but are less flexible when employees demand their wages, i. e. when they are in a relatively strong bargaining position.

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Year of publication:	2004-03
Authors:	Dittrich, Dennis A.V.
Institutions:	Max-Planck-Institut für Ökonomik, Max-Planck-Gesellschaft
Subject:	rigid wages \| reciprocity \| labor market \| efficiency wages

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Extent:	application/pdf
Series:	Papers on Strategic Interaction.
Type of publication:	Book / Working Paper
Notes:	24 pages
Classification:	C72 - Noncooperative Games ; C78 - Bargaining Theory; Matching Theory ; C91 - Laboratory, Individual Behavior ; E24 - Employment; Unemployment; Wages ; J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc ; J41 - Contracts: Specific Human Capital, Matching Models, Efficiency Wage Models, and Internal Labor Markets
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005765137