Bargaining process

Unfortunately the nature of the bargaining process is such that it is quite difficult to construct models that are realistic or analytical, the reason is because of the strategic interaction that takes place between the bargainers. Strategy interaction arises from the interdependency between the wage demands of TWU Local 100 and the MTA. 

One issue rises here which is the MTA’s wage offer, can we assume that it would not influence our demand? Which then causes the MTA to modify its offer, which may cause a further change in our position and so on. However we know what we had previously which can be used as a bench mark.

Lets take a single approach of the TWU Local 100 - MTA bargaining in order to see what reaction functions for the MTA and the TWU Local 100. This reaction functions are a pair of mathematical equations that predicts the wage demand of each bargainers over the x rounds of the negotiations.

Lets assume the equation contains two major parts - an objective function which states what it is that the bargainers are trying to maximize and a learning function which states how the bargainers alter their wage demands given what they have learned from their opponent’s most recent bargaining move. In many fields whether in automobile, real estate or even some kind of service always one bargains to what he or she feels comfortable with. If you are an automobile purchaser you would prefer to purchase that automobile as cheaply as possible while the dealer wants to maximize his profits. These equations are solved to yield the predicted time path of the bargaining demands of the TWU Local 100 and the MTA and the wage rate that the two sides will eventually agree on.

Questions - 1. Occupations A and B are identical except occupation B requires people to work at night. Assume that some people prefer night jobs, but that others do not. Will the wage in occupation B be higher, lower, or equal to that in A? 2. Consider the following statement: ‘As long as even one person dies from an assault incident there is not enough safety at the workplace.’ Evaluate this statement from an economic point of view. Critics charge that human life cannot be assigned a dollar value and benefits of additional safety cannot and should not be balanced against costs as advocated by economists. What do you think about this argument? 3. Only 2 percent of airline pilots are women and only 2 percent of dental hygienists are men. What reason can you give to account for this pattern?