Bowlby, Roger L.; Schriver, William R.
January 1978
ILR Review;Jan78, Vol. 31 Issue 2, p161
Academic Journal
This article focuses on bluffing and the split-the-difference theory of wage bargaining. Through long experience it has been discovered that the maximum (MAX) wage can be gained from any one of the employers without forcing it out of business. The union is accustomed to bargain by demanding this maximum on a take-it-or-leave-it basis. Through long experience it has discovered the minimum wage that can be gained from any worker without causing emigration. The employer is accustomed to bargain by demanding the minimum (MIN) wage on a take-it-or-leave-it basis. The worker eventually agrees. The bilateral monopoly problem, of which this MIN-MAX situation is a special case, has an extensive history in economic literature. The most important conclusion is that unions bluff more than management during collective bargaining. If the illegality of strikes changes the propensity to bluff during collective bargaining, then findings are more typical of public than of private sector bargaining and one might expect quite different results in the private sector.


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