Submitted by dd on
TitleWages, Length of Relationship and Bargaining Power
Publication TypeManuscript
Year of Publication2004
AuthorsDittrich, Dennis A. V.
Collection TitlePapers on Strategic Interaction
Date Published03/2004
Library/ArchiveMax Planck Institute of Economics
Type of WorkWorking Paper
Abstract

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.

URLftp://papers.mpiew-jena.mpg.de/esi/discussionpapers/2004-18.pdf
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