Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/167973
Authors: 
Nax, Heinrich H.
Pradelski, Bary S. R.
Year of Publication: 
2016
Citation: 
[Journal:] Games [ISSN:] 2073-4336 [Volume:] 7 [Year:] 2016 [Issue:] 2 [Pages:] 1-16
Abstract: 
We propose a dynamic model of decentralized many-to-one matching in the context of a competitive labor market. Through wage offers and wage demands, firms compete over workers and workers compete over jobs. Firms make hire-and-fire decisions dependent on the wages of their own workers and on the alternative workers available on the job market. Workers bargain for better jobs; either individually or collectively as unions, adjusting wage demands upward/downward depending on whether they are currently employed/unemployed. We show that such a process is absorbed into the core with probability one in finite time. Moreover, within the core, allocations are selected that are characterized by surplus splitting according to a bargaining solution such that (i) firms and workforce share total revenue according to relative bargaining strengths, and (ii) workers receive equal workforce shares above their individual outside options. These results bridge empirical evidence and provide a rich set of testable predictions.
Subjects: 
cooperative games
core
evolutionary games
matching
generalized Nash bargaining solution
JEL: 
C71
C73
C78
D83
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by/4.0/
Document Type: 
Article
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