AGGREGATE PATTERN OF TIME-DEPENDENT ADJUSTMENT RULES .1. A GAME-THEORETIC ANALYSIS OF STAGGERED VERSUS SYNCHRONIZED WAGE SETTING

This paper studies the benefits of staggered wage setting in reducing strategic conflicts. It is shown that when wage setters interact strat egically and dynamically, they prefer moving alternatingly, because by doing so, they are able to commit temporarily not to offset the effec ts of each other's action. It is also shown that synchronisation repre sents a better arrangement when agents are able to coordinate. These r esults are consistent with the presence of non-synchronous and decentr alised wage decisions in the United States and the United Kingdom and the presence of synchronous bargaining (in Shunto) and coordination in wage determination in Japan.