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The Nash bargaining solution in labor market analysis.

Source :
Metroeconomica; Jul2022, Vol. 73 Issue 3, p884-899, 16p
Publication Year :
2022

Abstract

Two alternative strategic foundations have been identified for applications of the Nash bargaining solution in economic modelling. However, neither interpretation is consistent with treating "threat point" or disagreement payoffs as individual outside options, a salient feature of bargaining relationships in most labor market settings. This paper uses a matching and strategic bargaining model to examine the determination of bargaining power weights and threat points in the asymmetric Nash bargaining solution. The key result establishes a strategic foundation for applying this solution to market settings with endogenously determined outside options, and shows that bargaining weights depend on outside market conditions only when the matching prospects of one side of the market or the other are relatively high. [ABSTRACT FROM AUTHOR]

Details

Language :
English
ISSN :
00261386
Volume :
73
Issue :
3
Database :
Complementary Index
Journal :
Metroeconomica
Publication Type :
Academic Journal
Accession number :
157233833
Full Text :
https://doi.org/10.1111/meca.12385