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We analyze the outcomes or game equilibria in these two cases.
Algorithmic aspects of this mechanism are analyzed such as relations between the values of game equilibria and the social optimum, the computational complexity of finding a game equilibrium and the values of the price of anarchy and the price of stability.
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Open image in new window Fig. 1 simultaneous moves game, Nash equilibria.
It derives the bargaining regimes which arise as sub-game perfect equilibria, and considers both simultaneous and sequential games where parties choose whether to coordinate wage negotiations across subsidiaries.
The sub-game perfect equilibria bargaining regimes are determined through a sequential game between a MNE and plant-level unions.
But miscommunication is what causes repeated-game cooperative equilibria to unravel in the first place.
The model is solved by backward induction, and the solution concept adopted is that of the sub-game perfect equilibria.
Then, retaining the idea that coordination is costly for unions, it investigates the bargaining regimes which arise as sub-game perfect equilibria.
Different bargaining regimes arise as sub-game perfect equilibria in the presence of workers' perfect substitutes in production, absence of asymmetries among the MNE's plants and labor unions paying transaction costs to coordinate their activities at transnational level.
In contrast, this work finds that different degrees of bargaining coordination arise as sub-game perfect equilibria, despite the absence of asymmetries in the plant efficiency and perfect substitutability among workers in production.
Besides developing entirely new conceptual tools far removed from folk notions different game-theoretic equilibria concepts, maximum entropy principles, etc.—formal epistemology also focuses on formulating precise surrogates for folk epistemic concepts, surrogates which often diverge markedly from entrenched meaning.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com