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Strikes and Game Theory

In recent news, Air France pilots have ended a fourteen day-long strike, but it has ended in an impasse. Earlier this year, in April, thousands of Lufthansa pilots went on strike for a better retirement plan. From May 2013 to October 2013, unionized workers led talks and multiple strikes against BART (Bay Area Rapid Transit), two of which led in complete BART shutdowns, which held massive repercussions for residents in the Bay Area that relied on the service for transportation to and from work. After a second huge strike, BART compromised and increased their initial offer. This brings us to the question of whether or not strikes are effective, and if so, how much. Strikes are generally uncommon, as about 98% of union contracts are settled each year without a strike.

In the case of a strike, the combination of strategies chosen by the management and the workers can lead to a variety of different outcomes. The management offers terms to workers, and if the works accept, then the game ends there. If the workers reject the management’s proposal, they go on strike and both parties get nothing. As time goes on, both sides lose more and more. Workers keep losing pay as they strike longer, and the company loses revenue the longer the strike goes on. Both sides can choose to be either aggressive or conciliatory, but the only way both sides gain is if they play the conciliatory strategy. Otherwise, one side gains while the other loses drastically. If both sides choose the aggressive strategy, they both end up at a small loss.

Here, we see that bargaining talks rather than drastic strikes would allow a win-win situation. However, the point of the game is not to hurt the other party as much as possible; it is to act in such a way that allows your party to gain the most. Unfortunately, the aggressive strategy is the one that seems like it would have the largest payout if it is successful, but if both parties play this strategy, they will end up losing. Thus, it is better for both parties to keep in mind that concialiatory talks will always have a positive payoff.

http://www.nytimes.com/2014/09/29/business/international/air-france-pilots-end-two-week-strike.html

http://www.sfgate.com/bayarea/article/BART-unions-end-strike-with-tentative-agreement-4913959.php

http://klasrum.weebly.com/uploads/9/0/9/1/9091667/labor_negotiations.pdf

 

 

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