Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/125105
Authors: 
Brügemann, Björn
Gautier, Pieter
Menzio, Guido
Year of Publication: 
2015
Series/Report no.: 
Tinbergen Institute Discussion Paper 15-100/VI
Abstract: 
The paper revisits the problem of wage bargaining between a firm and multiple workers. We show that the Subgame Perfect Equilibrium of the extensive-form game proposed by Stole and Zwiebel (1996a) does not imply a profile of wages and profits that coincides with the Shapley values as claimed in their classic paper. We propose an alternative extensive-form bargaining game, the Rolodex Game, that follows a simple and realistic protocol and that, under some mild restrictions, admits a unique Subgame Perfect Equilibrium generating a profile of wages and profits that are equal to the Shapley values. The vast applied literature that refers to the Stole and Zwiebel game to give a game-theoretic foundation to the use of the Shapley values as the outcome of the bargain between a firm and multiple workers should instead refer to the Rolodex game.
Subjects: 
Intra firm bargaining
Shapley value
JEL: 
D21
J30
Document Type: 
Working Paper

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