Bargainers learning function II

Aspiration level theory provides several important insights into both the resistance and concession curves and the actual practice of collective bargaining. The first has to do with the process of concession as well as the convergence of the reaction functions. We pointed earlier that often TWU Local 100 and MTA enter the negotiations with overly optimistic expectations of what they will be able to win - TWU Local 100 (or at least hopes) that the MTA will concede faster than it actually does while the MTA hopes for moderate or ‘responsible (net-zero wage increases)’ demands from TWU Local 100. The result in this case is that neither side gives in as much as the other expects and as the aspiration theory predicts the two sides mutually lower their estimates of what is attainable resulting in concessions and a movement along the resistance and concession curves toward the point of agreement.

A second insight provided by the aspiration level theory concerns the best use of bluffing in labor negotiations (does not happen in diplomacy or finance). Now lets look at the usual purpose of bluffing which is to give the negotiator some room to make concessions or to shift the opponents estimates in a way favorable to the bargainer.

Bluffing can also work to a bargainers disadvantage however since at some point the bluff (if it is truly a bluff) will have to be given away as a concession and the larger the concession is the more the other side is motivated to toughen its demands.

Aspiration level theory also explains the incremental way TWU Local 100 negotiators move toward a settlement. One might imagine an exasperated MTA negotiator saying to his or her TWU Local 100 counterpart ‘Let’s quit kidding around. You and I both know were going to settle for a raise of 25¢ so lets get it over with. That’s my offer!’ Unfortunately for the MTA negotiator ‘coming clean’ like that usually does not result in a settlement but in an escalation of TWU Local 100 demand. The MTA immediate offer of 25¢ (even though there is a huge gap to $1.50 which the membership desires) wont cease until the TWU Local 100 negotiator acquiesces. This example points out what is perhaps one of the most difficult tasks facing a TWU Local 100 negotiator - how to make concessions without the other side reading it as a sign of weakness.