Wage Bargaining Deadlock: Holdout Option Risks Inefficient Outcomes for Workers
The article discusses how union members can choose to keep working under the old contract while negotiating with their employer, known as the holdout option. Previous models focused on strikes and lock-outs, but this paper introduces a new game involving timing between unions and employers. The analysis shows that the holdout option can have mixed effects, as it may lead to inefficient behavior due to a conflict between short-term and long-term rationality.