Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 2 of 2
Full-Text Articles in Behavioral Economics
The Relation Between Variance And Information Rents In Auctions, Brett Katzman, Julian Reif, Jesse Schwartz
The Relation Between Variance And Information Rents In Auctions, Brett Katzman, Julian Reif, Jesse Schwartz
Jesse A. Schwartz
This paper examines the conventional wisdom, expressed in McAfee and McMillan's (1987) widely cited survey paper on auctions, that links increased variance of bidder values to increased information rent. We find that although the conventional wisdom does indeed hold in their (1986) model of a linear contract auction, this relationship is an artifact of that particular model and cannot be generalized. Using Samuelson's (1987) model, which is similar but allows for unobservable costs, we show that increased variance does not always imply increased information rent. Finally, we give the appropriate measure of dispersion (different from variance) that provides the link …
Wage Bargaining Under The National Labor Relations Act, Jesse Schwartz, Quan Wen
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.