implications of biased expectations for wage bargaining, vacancy creation, worker flows and labor market policies. Importantly, we … find that the specific assumption about the frequency of wage bargaining crucially shapes the propagation mechanism through … which expectation biases affect bargained wages and equilibrium outcomes. Moreover, we show that the presence of biased …

of biased expectations for wage bargaining, vacancy creation, worker flows and labor market policies. Importantly, we … find that under the widely used period-by-period Nash bargaining protocol, the model generates a counterfactual … relationship between workers' job separation expectations and wages. Instead, a wage setting process with less frequent wage …

-sections between wages and profitability. The alternative explanation of risk sharing between workers and employers has not been tested … insurance to employers: when firms are hit by temporary shocks the effect on profits is cushioned by risk sharing with workers … wages. …