Question 1

The 'Hicks paradox' describes which of the following?&#10;A) the sharing of wage increases secured by strikes with non-members&#10;B) the sub-optimal nature of strikes given the same outcome might have been secured without the costs to both sides of a strike&#10;C) the falling number of strikes in the UK alongside a growth in individual forms of conflict&#10;D) the lower incidence of strikes under secret ballot arrangements

Accepted Answer

The Hicks paradox refers to the sub-optimal nature of strikes since they often result in costs to both parties that could have been avoided if a mutually agreeable outcome had been reached through negotiation.

Question 2

Reder and Neumann's (1980) model of strikes emphasises the role of which of the following?&#10;A) principal-agent issues&#10;B) asymmetric information&#10;C) negotiating period length&#10;D) bargaining protocols

Accepted Answer

D

Question 3

Ashenfelter and Johnson's (1969) 'political' model of strikes predicts that strikes will be more likely&#10;A) when joint strike costs are highest&#10;B) the greater the firm's product price&#10;C) the greater the volume of information to be communicated between negotiators&#10;D) the lower the union's initial acceptable wage

Accepted Answer

B

Question 4

In Naylor's social custom model of individual strike participation, what will be the effect of an increase in the disutility of disobeying the social custom for non believers (g &#204;&#8230;)?&#10;A) the range of potential equilibria expands&#10;B) the range of potential equilibria diminishes&#10;C) the range of potential equilibria is unaffected&#10;D) it is not possible to determine the effect on the range of potential equilibria

Accepted Answer

An increase in the disutility of disobeying the social custom for non-believers makes it more costly for them to not participate in the strike, thus expanding the range of potential equilibria where more individuals are likely to conform to the social custom.

Question 5

Which of the following best describes the broad consensus about the relationship between strike measures and the economic cycle?&#10;A) strike incidence is counter-cyclical and strike duration is pro-cyclical&#10;B) strike incidence is pro-cyclical and strike duration is counter-cyclical&#10;C) both strike incidence and strike duration are counter-cyclical&#10;D) both strike incidence and strike duration are pro-cyclical

Accepted Answer

Research has shown that strike incidence tends to be pro-cyclical, meaning that it increases during periods of economic expansion and decreases during periods of economic contraction. On the other hand, strike duration tends to be counter-cyclical, meaning that it is longer during economic downturns and shorter during economic upturns. Therefore, strike incidence is more likely to occur during times of economic growth, while strike duration tends to be longer during economic recessions.

Question 6

Ceteris paribus, in which of the following situations would a strike likely be a more effective weapon for unions?&#10;A) tthe firm's production function is homothetic&#10;B) the firm's output is non-perishable&#10;C) the firm's production method requires the use of specialised labour&#10;D) the firm faces operates in a highly competitive product market

Accepted Answer

If the firm's production method requires the use of specialized labor, then the strike would be more effective as it would disrupt the production process and the firm would struggle to find replacement labor. In situations where the firm's production function is homothetic or the output is non-perishable, the firm may find alternative ways to produce the goods or may simply wait out the strike. And in a highly competitive product market, the firm may be able to quickly replace the striking workers with non-unionized labor.

Question 7

Which of the following would be expected to make settlement less likely in models of individual conflict bargaining?&#10;A) decreased court costs&#10;B) low levels of risk aversion&#10;C) over-optimism&#10;D) all of the above

Accepted Answer

Over-optimism can lead to an individual overestimating their chances of winning a case, which in turn makes them less likely to settle as they expect a better outcome from going to court. Decreased court costs and low levels of risk aversion would generally make settlement more likely, not less.

Question 8

According to Saridakis et al. (2008), small firms are?&#10;A) less likely to be the subject of an ET claim and more likely to lose at a hearing&#10;B) more likely to be the subject of an ET claim and more likely to lose at a hearing&#10;C) less likely to be the subject of an ET claim and less likely to lose at a hearing&#10;D) more likely to be the subject of an ET claim and less likely to lose at a hearing

Accepted Answer

Saridakis et al. (2008) found that small firms are more likely to be the subject of an Employment Tribunal (ET) claim and more likely to lose at a hearing, highlighting the challenges small firms face in legal disputes compared to larger organizations.

Deck 7: Bargaining and Conflict