Question

EXERCISE 4.10 STRIKES AND THE ULTIMATUM GAME

A strike over pay or working conditions may be considered an example of an ultimatum game.

1. To model a strike as an ultimatum game, who is the Proposer and who is the Responder?

2. Draw a game tree to represent the situation between these two parties.

3. Research a well-known strike and explain how it satisfies the definition of an ultimatum game.

4. In this section, you have been presented with experimental data on how people play the ultimatum game. How could you use this information to suggest what kind of situations might lead to a strike?

Answer 1

1. The proposer is considered here as working condition because if the workers don't have proper working conditions they will demand higher pay and the responder here is considered as the pay.

2. The game tree is presented diagrammatically. Here, two kids Tommy and Jahnvi are given 15 biscuits. Tommy gets the biscuits and asks Jahnvi if she wants to have any, if Jahnvi rejects the offer then Tommy will also not get anything. If Jahnvi accepts even one biscuit that means she is accepting offer and thus Tommy will get the remaining 14 biscuits. In any case, Jahnvi should choose any number of biscuits from 1 to 14. If she gets 0 biscuit it's better for her to reject the offer.

3. A well known strike in the U.S.A is the steel strike of 1959 in which 5,00,000 workers participated, this strike was of the duration from July to November 1959. This strike had a nationwide affect. The profits of the steel industries were skyrocketing seeing which the workers demanded higher wages. The workers are proposers here, so they have demanded higher wages. Failing to pay them higher wages they will not work which will discontinue the steel production. The responders, in this case the steel firm owners have increased their wages, ie giving the workers a higher wage(positive increase) have made the workers accept the proposal, thus they have discontinued the strike. On not giving the workers a higher wage the workers would have rejected the offer and have continued the strike thus disrupting the further production of steel.

4. From this experimental data I can say not proving the workers a higher wage when the firms are incurring very high profits will give rise to strikes. Moreover, other then this I think the employer's conditions should be improved in the workplace so not to give rise to strikes. The health benefits of the workers should be considered, so long wotkiwo hours should be provided and a well balanced work life bskabal if the workers should be maintained in order to avoid strikes.