Article ID: | iaor20013498 |
Country: | Germany |
Volume: | 29 |
Issue: | 2 |
Start Page Number: | 165 |
End Page Number: | 176 |
Publication Date: | Jan 2000 |
Journal: | International Journal of Game Theory |
Authors: | Reyniers D.J. |
Keywords: | bargaining |
In this paper we consider the effect of the ‘impatience ratio’ I (of the worker discount factor to the firm discount factor) on the preferences of the players between two bargaining schemes in an asymmetric information wage bargaining context. The firm has private information about the worker's value and the worker makes wage demands. In the contact bargaining scheme, a wage demand which is accepted in one period is binding for all future periods (and hence the bargaining ends after acceptance of a wage demand). In the repeated bargaining scheme, the parties continue to bargain irrespective of whether the worker has been hired or not, and any accepted wage demand is only valid for the period in which it was accepted. We establish the following results under the assumption that the worker's value is uniformly distributed on an interval: When the firm is more patient than the worker (