PUBLIC-SECTOR COLLECTIVE BARGAINING: LESSONS FROM GAME THEORY

LAWRENCE J. HABER
JOHN WELLINGTON

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DOI: 10.2190/BPAG-2924-9XM4-0L30

Abstract

Negotiations between management of a company or agency and unions representing its workers recur at more or less regular intervals over time. In each of the negotiations, each party has the incentive to cooperate with the other for mutual benefit, and simultaneously, the incentive to seek gain at the other's expense. The authors analyze these incentives in the context of a repeating series of Prisoner's Dilemma games. The conclusion drawn is that cooperative bargaining relations are most easily maintained when threats made are credible and, yet, when there is sufficient restraint exercised by the parties that trust between them is maintained.

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