A Dynamic Model of Collective Bargaining
We use high-low search algorithms to compute equilibria in a multi-period model of collective bargaining. In this model, a group of workers bargains collectively with a firm which knows the per period incremental value v of each worker. The workers don't know their individual values, but use high-low search to learn them, given the known distribution of values in the group. In the first period the workers make a common wage demand w1 and then the firm chooses a cutoff level y for the workers they will hire (i.e., those with v≥ y). Since y is observable through numbers hired, workers may update their beliefs about their values, based on whether or not they were hired. In later periods workers with common beliefs make common wage demands. The main question addressed in the paper is how the firm can choose the hiring cutoff level to hinder the workers' learning process. We find (Theorem 1) that the firm's equilibrium strategy is to (i) hire some workers at a loss, and also (ii) to forego some profitable hirings. However (Theorem 2) the equilibrium outcome involves only the first kind of strategic loss by the firm. We also find (Theorem 3) that the firm's profit is less than when the worker optimizes against a predictable myopic firm (which chooses y=w1). Thus the firm would wish to commit to the myopic hiring strategy if it were possible.
Information and rationality asymmetries in a simple high-low search wage model
A simple model of wage bargaining is developed. The firm knows the worker's productivity but the worker has only probabilistic information about his value to the firm. The worker acquires information by making wage demands and observing the resulting hiring/firing decisions of the firm. The firm acts strategically and distorts the worker's learning process.
History of Amateurism in Men's Intercollegiate Athletics: The Continuance of a 19th-Century Anachronism in America
Claiming that American intercollegiate athletics are amateur at the end of the 20th century is an anachronism, for colleges in the 19th century took on professional characteristics. The upper-class British concept of amateurism did not work effectively in a more egalitarian and achievement-oriented American society. Hypocrisy resulted when colleges claimed amateurism while accepting such professional practices as hiring professional coaches, allowing athletes to play summer baseball for money, and paying athletes through grants-in-aid. Attempts to preserve amateurism, such as the Graham Plan in the 1930s and the Sanity Code in the 1940s and 1950s, yielded to the professional spirit. Thus, while Americans had generally rejected the upper-class British social hierarchy that fostered amateurism, they retained the name amateur, continuing the hypocrisy that had begun in the previous century.