Economic Theory Commons^™

Wage Bargaining Under The National Labor Relations Act, Jesse Schwartz, Quan Wen

Jesse A. Schwartz

Sections 8(a)(3) and 8(a)(5) of the National Labor Relations Act (NLRA) prohibit the management of a firm from unilaterally increasing the wage during contract negotiations without the union's approval. We show how the management can strategically increase the wage during negotiations without violating the NLRA. Increasing the wage during negotiations will upset the union's incentive to strike and decrease the union's bargaining power, thereby shrinking the set of equilibrium contracts in the firm's favor. Indeed, as the union becomes more patient, the set of equilibrium wages converges to the best equilibrium outcome to the firm.

Wage Negotiation Under Good Faith Bargaining, Jesse Schwartz, Quan Wen

Jesse A. Schwartz

We study the wage negotiation model of Haller and Holden (1990) and Fernandez and Glazer (1991) under the "Good Faith Bargaining" (GFB) rule, where a party may not demand more than it has previously demanded. The GFB rule significantly restricts feasible strategies, but at the same time, makes the game non-stationary and the analysis complicated. We introduce a state-dependent backward induction that generalizes Shaked and Sutton (1984) to characterize the equilibrium payoffs. We find that the GFB rule eliminates the union's credibility to strike. Without the strikes, the union's strategic opportunities during disagreement disappear, so that there is a unique …

A Theory Of Outsourced Fundraising: Why Dollars Turn Into "Pennies For Charity", Zdravko Paskalev, Huseyin Yildirim

Huseyin Yildirim

Charities frequently rely on professional solicitors whose commissions exceed half of total donations. To rationalize this practice, we propose a principal-agent model in which the charity optimally offers a higher commission to a more "efficient" solicitor, raising the price of giving significantly. Outsourcing is, therefore, profitable for the charity only if giving is very price-inelastic. This, however, clashes with empirical evidence. We show that paid solicitations can benefit the charity if: (1) donors are unaware; (2) donors have intense "warm-glow" preferences; or (3) the charity worries mostly about watchdog ratings. Unable to regulate fundraiser contracts due to freedom of speech, …

A Note On Monitoring Costs And Voter Fraud, Philip E. Graves, Robert L. Sexton, Gary Galles

PHILIP E GRAVES

Election fraud can threaten democracy if many ineligible people are allowed to vote. The usual policy prescription is to increase monitoring cost. However, this is very costly. This paper proposes a more cost effective strategy: substitute tougher and consistent statutes across states against voter fraud.

A Volatility-Based Theory Of Fiscal Union Desirability, Jaime Luque, Massimo Morelli, José Tavares

Jaime P. Luque

Wages, Local Amenities And The Rise Of The Multi-Skilled City, Jaime Luque

Jaime P. Luque