Intra Firm Bargaining and Shapley Values

Björn Brügemann (), Pieter Gautier and Guido Menzio
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Björn Brügemann: Vrije Universiteit Amsterdam
Authors registered in the RePEc Author Service: Bjoern A. Bruegemann

No 9293, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: intra firm bargaining; Shapley value (search for similar items in EconPapers)
JEL-codes: D21 J30 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2015-08
New Economics Papers: this item is included in nep-gth, nep-lma and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Published - published in: Review of Economic Studies, 2019, 86 (2), 564 - 592

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Related works:
Journal Article: Intra Firm Bargaining and Shapley Values (2019)
Working Paper: Intra Firm Bargaining and Shapley Values (2018)
Working Paper: Intra Firm Bargaining and Shapley Values (2016)
Working Paper: Intra Firm Bargaining and Shapley Values (2015)
Working Paper: Intra Firm Bargaining and Shapley Values (2015)
Working Paper: Intra Firm Bargaining and Shapley Values (2015)
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