Question

Suppose you receive an outside offer of employment that provides a substantial raise over your current salary. According to our textbook, the outside offer should improve your bargaining position with your current employer. However, your supervisor may also decide not to bargain and leave you to remain in your current job without a raise or to take the outside offer. So, we can view this bargaining relationship with your employer as a repeated game that takes another turn whenever you receive another outside opportunity. What do the principles about repeated games and bargaining that we have studied in this class imply for your approach to managing this relationship?

Answer 1

Repeated games are one strategy for the players to make the opponent feel weak and make the player have an edge over the opportunities available. Repeated actions will also capture the ideas of each player which will account the impact of one player's actions with that of the actions of the opponent player.

Repeated gains are expected to yield immediate gains and long term incentives. Like in this case the employee tries to negotiate the beat with his present employer by stating that he is more skilled and thus has a lot of opportunities outside but inspire of that wants to work for the present company. Hence the present employer tries to retain the employee by giving him incentives.