Strikes with asymmetric information : theory and evidence / Alison Booth and Robert Cressy.

Abstract

The paper develops a game-theoretic bargaining model to explain why strikes might occur during pay negotiation. The model assumes asymmetry of information between a union and a firm negotiating over the division of economic surplus. A strike can occur because the union faces uncertainty about the firm's profitability. The predictions of the model are then tested against the 1984 Workplace Industrial Relations Survey. Both the strike incidence probability and the strike duration probability (conditional on a strike having occurred) are estimated using simultaneous equation probit techniques controlling for sample selection bias. The results indicate some important features of the industrial relations environment that are associated with a high strike probability at the establishment level. Show more