Wage bargaining with discount rates varying in time under exogenous strike decisions

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Working paper
Ahmet Ozkardas, Agnieszka Rusinowska
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Centre d’Economie de la Sorbonne
In this paper, we present a non-cooperative wage bargaining model in which preferences of both parties, a union and a firm, are expressed by sequences of discount factors varying in time. We determine subgame perfect equilibria for three cases when the strike decision of the union is exogenous: the case when the union is supposed to go on strike in each period in which there is a disagreement, the case when the union is committed to go on strike only when its own offer is rejected, and the case when the union is supposed to go never on strike.
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