inertia and creeping rationality in strategic decision processes in two earlier studies comprehensiveness a characteristic of rational strategic decision making processes exhibited a positive relationship with organizational performance in a stable environmen

capital utilization and capital accumulation theory and evidence a firm may acquire additional capital input by purchasing new capital or by increasing the utilization of its current capital the margin between capital accumulation and capital utilization is studied in a model of dynamic factor demand where the firm chooses capital labour and their rates of utilization a direct measure of capital utilization the work week of capital is incorporated into the theory and estimates the estimates imply that capital stock is costly to adjust while the work week of capital is essentially costless to adjust the estimated response of the capital stock to changes in its price and in the required rate of return is more rapid than found in other estimates

bilateral bargaining with externalities this paper provides an analysis of a non cooperative pairwise bargaining game between agents in a network we establish that there exists an equilibrium that generates a coalitional bargaining division of the reduced surplus that arises as a result of externalities between agents that is we provide a non cooperative justification for a cooperative division of a non cooperative surplus the resulting division is related to the myerson shapley value with properties that are particularly useful and tractable in applications we demonstrate this by examining buyer seller networks and vertical foreclosure

the power to delay abstract this paper studies a bilateral bargaining game in which one party can suspend the game indefinitely if suspension is costless multiple equilibria arise if suspension is costly and subject to a budget constraint a unique equilibrium with immediate agreement is obtained

bargaining orders in a multi person bargaining game abstract this paper studies a complete information bargaining game with one buyer and multiple sellers of different sizes or bargaining strengths the bargaining order is determined endogenously with a finite horizon there is a unique subgame perfect equilibrium outcome in which the buyer purchases in order of increasing size from the smallest to the largest with an infinite horizon if the sellers have sufficiently different sizes there is a unique equilibrium outcome which has the same bargaining order if the sellers have similar sizes with an infinite horizon there may be multiple equilibrium outcomes with different bargaining orders

bargaining binding contracts and competitive wages in a model where many workers bargain with one firm and sign binding contracts we show existence of a stationary subgame perfect equilibrium if the production function satisfies decreasing return

on the role of confidentiality and deadlines in bilateral negotiations abstract the preference between public and private negotiations for a buyer who sequentially visits two sellers is examined it is shown that the buyer weakly prefers private negotiations so as to create strategic uncertainty about the trade history with substitute goods such uncertainty is valuable only when price offers have short deadlines that prevent a head to head competition with complementary goods strategic uncertainty is valuable to the extent that price coordination becomes a concern for sellers which is likely to be the case when sellers possess high bargaining powers their price offers have short deadlines and or goods are weak complements sellers strategic deadline choices as well as their incentives to disclose information about negotiations are also investigated

intra firm bargaining under non binding contracts we present a new methodology for studying the problem of intra firm bargaining based on the notion that contracts cannot commit the firm and its agents to wages and employment we develop and analyse a general non cooperative multilateral bargaining framework between the firm and its employees and consider outcomes which are immune to renegotiations by any party equilibrium firm profits are characterizable as both a weighted average of a neo classical non bargaining firm s profits and a generalization of shapley value for a corresponding cooperative game furthermore the resulting payoffs induce economically significant distortions in the firm s input and organizational design decisions

payoff uncertainty bargaining power and the strategic sequencing of bilateral negotiations this article investigates the sequencing choice of a buyer who negotiates with the sellers of two complementary objects with uncertain payoffs the possibility of inefficient trade may generate strict sequencing preference the buyer begins with the weaker seller if the sellers have diverse bargaining powers and with the stronger one if both sellers are strong bargainers this sequencing is likely to increase the social surplus moreover the buyer may find it optimal to raise her own acquisition cost by committing to a minimum purchase price or outsourcing the first and second mover advantages for the sellers are also identified

fooling all of the people some of the time a theory of endogenous sequencing in confidential negotiations we analyse a bargaining game in which one party called the buyer has the option of choosing the sequence of negotiations with other participants called sellers when the sequencing of negotiations is confidential and the sellers goods are highly complementary efficient non dissipative equilibria exist in which the buyer randomizes over negotiation sequences in these equilibria the buyer can obtain higher pay offs than in pure strategy equilibria or in public negotiations the degree of sequencing uncertainty that maximizes buyer pay offs is inversely related to the aggregate bargaining power of the sellers

intra firm bargaining and shapley values we study two wage bargaining games between a firm and multiple workers we revisit the bargaining game proposed by stole and zwiebel we show that in the unique subgame perfect equilibrium the gains from trade captured by workers who bargain earlier with the firm are larger than those captured by workers who bargain later as well as larger than those captured by the firm the resulting equilibrium payoffs are different from those reported in stole and zwiebel as they are not the shapley values we propose a novel bargaining game the rolodex game which follows a simple and realistic protocol in the unique no delay subgame perfect equilibrium of this game the payoffs to the firm and to the workers are their shapley values

worker substitutability and patterns of unionisation a strategic three party bargaining model is developed in which one distinguished party the firm has to reac h agreements with the other two each of which is a group of workers in the prebargaining stage the two worker groups decide whether to organize jointly or separately the main observation relates the equi librium pattern of unionization to the substitutability in production between the two groups the outcome is joint or separate unions acco rding to whether the two groups are substitute or complementary facto rs of production the analysis also considers possibilities for firm s strategic intervention in the unionization process copyright 1988 by royal economic society

decentralized one to many bargaining we study a one to many bargaining model in which one active player bargains with every passive player on how to share the surplus of a joint project the order of bargaining is not fixed and the active player decides whom to bargain with in each period our model admits a rich set of equilibria and we identify the upper and lower bounds of equilibrium payoffs we also examine whether two natural ordering protocols often assumed in existing studies can sustain endogenously although the queuing protocol may indeed arise in an equilibrium the rotating protocol is in general not self enforcing

managing foreign subsidiaries agents of headquarters or an interdependent network in this study two different theoretical perspectives are used to develop sets of hypotheses regarding the mechanisms used to manage foreign subsidiaries of multinational corporations first agency theory serves as the basis for a model that predicts the use of monitoring mechanisms and incentive compensation then it is argued that these mechanisms are insufficient for managing subsidiaries characterized by high levels of intra firm international interdependence the management of which is critical to many of today s complex global firms a second set of hypotheses is argued linking international interdependence to several social control mechanisms primary and secondary data from u s based multinational corporations were used to test both sets of hypotheses the results indicate that agency theory although a useful foundation for studies of control within mncs is limited in its ability to explain fully the phenomenon of foreign subsidiary control however the model based on intra firm interdependence had much greater predictive ability copyright 2000 john wiley sons ltd

a letter to the editor on wage bargaining abstract the rubinstein perfect information alternating offers bargaining model is problematic when applied to wage negotiations a strike or any other industrial action is not an automatic consequence of a delay in reaching an agreement because production can continue normally also when negotiations take place this paper extends the rubinstein model to incorporate the choice of calling a strike and it is shown that in this model there is no longer a unique subgame perfect equilibrium and that strikes with a length in real time can occur in equilibrium

non cooperative bargaining theory an introduction the paper provides an informal introduction to some of the main themes of the recent literature on non cooperative or sequential bargaining models it focuses in particular on the relationship between the new approach and the traditional axiomatic approach exemplified by nash bargaining theory it illustrates the new insights offered by the non cooperative approach by reference to a detailed analysis of the manner in which the presence of an outside option available to one of the parties will affect the negotiated outcome finally the difficulties which arise in extending this analysis to two person bargaining with incomplete information and to n person bargaining are discussed this is a revised version of the fourth review of economic studies lecture presented in april 1985 at the joint meeting of the association of university teachers of economics and the royal economic society held in oxford the choice of lecturer is made by a panel whose members are currently professors hahn mirrlees and nobay and the paper is refereed in the usual way this paper aims to provide an informal and elementary introduction to an approach to bargaining which has received a great deal of attention over the past few years the approach involves writing down some particular sequence of moves offers and replies to be made over time in the course of negotiations and then looking for a non cooperative equilibrium in the game thus specified in practice a perfect equilibrium or in games of incomplete information a sequential equilibrium while the approach appears at first sight to be very different in spirit from the traditional axiomatic approach in which a bargaining solution is specified by appealing to a number of general requirements which are deemed appropriate on the basis of some a priori considerations the two approaches are in fact complementary while the

firm and industry as determinants of executive perceptions of the environment this study examines variation in top executives environmental perceptions within firms and within industries more specifically we investigate how industry and organizational membership affect top executives perceptions of five environmental attributes results indicate that significant homogeneity of perceptions exists within firms and also within industries approximately 40 percent of the variance in individual top level executives perceptions of aspects of their respective organization s environment is explained by their organizational and industry membership implications of the findings for strategic management and organization theory and for future research are presented 1998 john wiley sons ltd commonality of views about a firm s environment among a firm s top managers is frequently discussed but there is little empirical evidence to validate the notion we do not know whether homogeneity of perceptions within top management teams tmts is more imaginable than real an assumed executive team property corresponding to what common sense says should be the case further if there is within firm commonality of views concerning the environment we do not know whether this might not actually be an industry effect the purpose of the research reported here is to assess the degree of homogeneity in executives perceptions within firms and within industries and to compare organizational vs industry membership as explanations of the relative proportion of agreement about organizational environments one of the most compelling reasons to examine the homogeneity of top managers environmental perceptions within firms and within industries

bilateral monopolies and incentives for merger the paper presents a model of duopoly in which firms acquire inputs through bilateral monopoly relations with suppliers it combines a bargaining model with a duopoly model to examine how input pri

non cooperative bargaining and union formation we study a union formation decision problem when workers consist of two groups distinguished by different productivities workers may form either a joint union or two separate unions the whole decision process is modelled as an extensive form bargaining game workers form a joint union when the sizes or productivities of the groups are similar in the first case there is a wage differential which is more less than proportional to the productivity difference if the size of the more productive is smaller larger than that of the less productive in the second case there is no wage differential in this paper we study a union formation decision problem when workers consist of two groups distinguished by different productivities they may form either a joint union or two separate unions depending on the relative size and productivity of the two groups the whole decision process is modelled as an extensive form bargaining game in which the two groups of workers bargain with each other as well as with a firm the labour market is sharply distinguished from the goods market by the widespread practice of collective bargaining usually several groups of workers with different characteristics for example skill level or geographical location are represented as a single unit and or several employers form a single bargaining unit against a giant union this multiplicity of bargaining units creates a complicated bargaining structure and makes the outcome hard to analyse the purpose of this paper is to provide a model which captures this complexity and at the same time clarifies the underlying structure of bargaining power although economists have been aware of the multiplicity problem for a long time it has been received little rigorous theoretical treatment until recently davidson 1985 examined the possible gains that can be obtained by trade unions through joint bargaining in an oligopolistic industry there is a positive externality due to the fact that a higher wage rate in one firm generates a larger demand hence a higher wage in competing firms when a joint union is organized these externalities are internalized to the benefit of workers horn and wolinsky 1985 investigated the equilibrium pattern of unionization in an industry where a firm employs two types of workers they found that workers tend to form a single union when the two types are substitutes in the sense that the incremental contribution of one group to the firm s revenue is decreasing with respect to the size of the other group since workers bargaining power comes from the loss that they can

delay in multilateral bargaining under complete information abstract this paper analyzes a complete information infinite horizon multilateral bargaining model in which one player bargains with each of the other players one at a time and binding cash offer contracts are used to govern transactions under a weak stationarity condition on equilibrium strategies we characterize the set of equilibria for the game we show that when players are sufficiently patient significant delay in reaching agreements may emerge and this delay can become longer quickly as the number of involved parties rises indeed when the number of bargainers is large perpetual disagreement can occur in equilibrium journal of economic literature classification numbers c78 d23 d62

effects of cultural ethnicity firm size and firm age on senior executives trust in their overseas business partners evidence from china we investigate trust relationships between senior business executives and their overseas partners drawing on the similarity attraction paradigm social categorization theory and the distinction between cognition and affect based trust we argue that executives trust their overseas partners differently depending on the partners cultural ethnicity in a field survey of 108 chinese senior executives we found that these executives have higher affect based trust in overseas partners of the same cultural ethnicity as themselves cognition based trust is associated with affect based trust differently when overseas partners are of the same or different cultural ethnicity we also examine the role of relative firm size and age in shaping intra and intercultural trust relative firm size has a stronger negative effect on executives cognition based trust if their partners are of a different cultural ethnicity although firm age does not have a negative effect on executives affect based trust as hypothesized we found firm age to be positively associated with affect based trust for partners of the same cultural ethnicity we discuss theoretical and practical implications of this pattern of inter and intra cultural trust on international business and networking guanxi dynamics in china

striking for a bargain between two completely informed agents this paper models the wage contract negotiation procedure between a union and a firm as a sequential bargaining process in which the union must decide in each period whether or not to strike for the duration of that period we show that there exist subgame perfect equilibria in which the union engages in several periods of strikes prior to reaching a final agreement although both parties are completely rational and fully informed this has implications for other inefficient phenomena such as tariff wars debt negotiations and wars in general we characterize the set of equilibria show that strikes can occur in real time and discuss extensions of the model such as lockouts and the possibility of multiple recontracting opportunities copyright 1991 by american economic association

rational decision making and firm performance the moderating role of environment this study investigates the moderating roles of environmental munificence and dynamism in the relationship between process rationality and organizational performance based on a sample of 62 manufacturing firms the study found that environmental munificence and dynamism moderate the relationship between rationality and performance further the study found that rationality is strongly associated with performance in environments high in munificence and dynamism 7997 by john wiley sons ltd the relationship between rationality in strategic decision processes and firm performance has been a subject of continuing controversy in the strategic management field one school of thought favors the rational comprehensive approach ansoff 1965 another feels that an incremental political approach offers better descriptive accuracy and normative validity quinn 1980 in recent years the emphasis has moved away from a search for universal relationships that juxtapose these two ideal types to a focus on the context specificity of the rationality performance relationship empirical research on the perfonnance implications of the comprehensiveness of decision processes has yielded confiicting results in a recent review of this literature rajagopalan rasheed and datta point out that most previous studies have focused on one aspect of the

proposal power and majority rule in multilateral bargaining with costly recognition this paper studies a sequential bargaining model in which agents expend efforts to be the proposer in equilibrium agents effort choices are influenced by the prize and cost effects the endogenous prize is 9

a critical assessment of the eclectic theory of the multinational enterprise the paper critically deals with the electric theory of the multinational enterprise it examines firstly the theoretical redundancy of the ownership advantage secondly the inseparability of the ownership advantage from the location advantage thirdly the conceptual ambiguity of the location advantage and lastly possible methodological dangers of a multi factor analysis under the three headings of the eclectic theory

distribution of surplus in sequential bargaining with endogenous recognition i examine a sequential bargaining situation in which agents contest the right to propose an allocation the contest can either take place at a pre bargaining stage yielding persistent recognition to propose or recur throughout the bargaining yielding transitory recognition equilibrium analysis reveals that surplus is distributed more unequally under persistent recognition social cost is higher under persistent recognition if and only if it attracts a sufficient number of active bargainers and individual s incentive to propose under transitory recognition may actually increase in the number of agents while this incentive always diminishes under persistent recognition

environmental scanning behavior in a transitional economy evidence from russia we examined the effects of perceived strategic uncertainty in seven environmental sectors on the scanning behavior of russian executives strategic uncertainty was highest in sectors influenced by

perfect equilibria in a negotiation model rubinstein s alternating offers bargaining model is enriched by assuming that players payoffs in disagreement periods are determined by a normal form game it is shown that such a model can have multiple perfect equilibria including inefficient ones provided that players are sufficiently patient delay is possible even though there is perfect information and the players are fully rational the length of delay depends only on the payoff structure of the disagreement game and not on the discount factor not all feasible and individually rational payoffs of the disagreement game can be supported as average disagreement payoffs indeed some negotiation games have a unique perfect equilibrium with immediate agreement