SMU SOE Seminar (Nov 2, 2017): Cooperation and Dynamic Network Formation in a Labor Union: A Game Theoretic Case Study

Cooperation has been associated with “closely knit” organizations, where members know each other well and stay in an organization for a long time.  In contrast, we show that cooperation is also possible in a “loosely knit” organization, where members do not know each other well under frequent entry and exit.  In particular, we present a case study of a labor union of a quite unusual form, whose structure closely resembles the OLG repeated game with private monitoring.  We collected detailed original data to examine how the network of cooperation has been formed among union members.  Finding the mechanism (equilibrium) to sustain cooperation is challenging, because members have limited information about who helped whom.  With the help of interviews and data, we identified a possible mechanism to sustain cooperation in the union, which is surprisingly similar to the belief-free equilibrium in the theoretical literature on repeated games with private monitoring.

*Some preliminary results were announced in the Proceedings of the National Academy of Sciences: 

 

The talk will present analysis based on comprehensive data collected from the publication of this paper.