Stakeholders, Bargaining and Strikes

• Autores: Paola Manzini, Clara Ponsatí Obiols
• Localización: Abstracts of the Fifth Spanish Meeting on Game Theory and Applications / coord. por Jesús Mario Bilbao Arrese , Francisco Ramón Fernández García , 2002, ISBN 84-472-0733-1, pág. 38
• Idioma: inglés
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• Resumen

  • In Marcel Pagnol�s movie �La femme du boulanger�, the baker�s wife runs away with her lover. But then, the baker bakes bread which his wife sells, so that without her the baker�s enterprise is worthless. So, the baker goes on strike, sending a clear message to the village: no wife, no bread. The village goes up in arm, but there is no convincing the baker. The only option left to the villagers is to go on the hunt for the baker�s wife, and bring her back to return harmony (and bread) to the French village. This amusing story captures effectively the fact that conflict affecting certain services, whether publicly or privately provided, does concern, directly or indirectly, the interests of many parties. Bilateral bargaining in an area of public interest therefore has an impact on third parties, stakeholders, who are interested in the resolution of the conflict, yet unable to impose an agreement upon the contending bargainers.

    In this paper we analyse the effect that stakeholders have on the bargaining outcome.

    The mere fact that the interests affected by the conflict extend well beyond the two participants is what defines its �public interest� attribute. It is reasonable to assume that in many cases the public interest will have much wider consequences than the issue at stake in the bargaining. For instance, the disruption of essential services like public transport, hospitals, the fire service and the electricity, gas and water industries has a substantial impact on the population at large. Correspondingly, the government�s stake in bilateral conflicts which are of public concern is of some consequence. That is, one can postulate that the government�s stake can be quantified as �greater� than the issue bargained over. This immediately presents a potential for exploitations from the two contenders: as long as the stakeholder has more to lose from disagreement, bargainers should succeed in extracting some resources from the stakeholder.

    Indeed, especially during the �70s and the �80s, Europe was hit by a wave of general strikes in which workers managed to win (mainly salary) concessions from the government of the day. The following two decades have seen an effort of governments across Europe towards a greater flexibilisation of employment laws which apply to employment in services of public interest, so as to�harmonise� it with the private sector. These changes in the legislation regulating industrial relations, which in the mains have been directed at weakening the power of trade unions, have generally tended towards a decentralisation of bargaining in the public sector. The effect has been to transform what would have been in essence a bilateral relationship into trilateral negotiations between management and union in the shadow of possible state . Consequently, the sheer possibility that the stakeholder (i.e. the government) may intervene in negotiations creates the potential for delays, in the hope to pressurise the government into conceding extra resources. So why wouldn�t the stakeholder with the power to do so change the �rules of the game� to a more efficient negotiating framework? These are the type of issues we address in this paper. More precisely, we explore bilateral bargaining explicitly accounting for the presence of stakeholders.

    We model such bargaining problems as non-cooperative games with three players: two players, the bargainers, have the ability to reach an agreement; the third player, a stakeholder, can only take (limited) actions that condition the nature of the bilateral bargaining. We start by looking at the strategic incentives in a simple bargaining model with perfect and complete information. Our main finding confirms our original suspicion that the presence of a stakeholder generates delays: stakeholders are usually willing to make contributions to promote agreement, but this willingness may backfire and become the source of severe inefficiency. However, and more surprisingly, for a wide range of parameter values this outcome is better for the stakeholder than a situation in which he bargains directly with the union. The intuition for this result is straightforward.

    Delays are harmful for all of the agents involved in negotiations; however, in trilateral negotiations the management and the stakeholder can join forces and secure as a coalition an ex ante expected payoff which is greater than what they would otherwise obtain as a single negotiator in bilateral bargaining with the union.

    These results concern the situation where all parties are perfectly informed about the overall resources available. In practice, however, negotiators seldom have an accurate assessment of the means at the stakeholder�s disposal. Thus in the second part of the paper we analyse the effects of uncertainty by building a simple model where bargainers are unsure about the stakeholder�s stake.

    Note that besides being more realistic, this type of framework can account for situations where the stakeholder is genuinely super partes, or even antagonistic to one or both of the other negotiators. We find that, not surprisingly, uncertainty does not remove inefficient (i.e. delayed) equilibria. However, as long as the stake is not too great, there are also equilibria in which the two litigants reach an efficient agreement with positive probability. This class of equilibria are driven by the expectation of the two bargainers that the stakeholder would not intervene in case of a stalemate, which makes it worthwhile for the bargainers to get to an agreement quickly. Consequently, it is optimal for the stakeholder to dither, thereby pressurising the two bargainers into reaching a speedy conclusion. The general features of the situation that we model fit many contingencies beyond industrial relations, and the framework of analysis that we propose is general enough to model stake holders as �interested� parties, which may still be genuinely neutral. For example, arbitrating and mediating efforts by neutral third countries to promote peace settlements to end armed confrontations are possibly motivated by the assessment that more is at stake than the welfare of the actors directly involved in the conflict.