Discussion Paper Details

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Title: Regret and Jubilation in Union Wage Bargaining

Author(s): Michael Beenstock

Publication Date: March 1987

Keyword(s): Collective Bargaining, Jubilation Effect, Labour Markets, Regret Effects, Unions, Utilitarian Assumption and Wages

Programme Area(s): International Macroeconomics

Abstract: A theoretical model of collective wage bargaining is developed in which unions set wages and employers decide employment. A novel feature of the model is that the conventional expected utility calculus is replaced by one in which regret from failed wage bargains and jubilation from successful ones influence decision-making under uncertainty. This gives rise to a series of wage bargaining rounds in which collectively determined wage rates rise and employment falls. This dynamic behaviour is not implied by conventional analyses.

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Bibliographic Reference

Beenstock, M. 1987. 'Regret and Jubilation in Union Wage Bargaining'. London, Centre for Economic Policy Research.