An abstract image depicting two opposing forces in a high-stakes confrontation, symbolizing educational labor strikes. One side features academic symbols like a university building and graduation cap, representing university administration, while the other side shows symbols of faculty and students like books and pens. The background is intense with red and blue colors, illustrating the tension and urgency of a strike.

Educational Labor Strikes and the Game of Chicken

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Jan 11, 2024

Have you ever heard of the street game called Chicken? For those unfamiliar, it involves two friends driving toward each other. The goal of this twisted game? To be the last one to swerve into safety. If one individual swerves and “chickens out,” they walk away physically uninjured but with their pride in shreds. Alternatively, if individuals are too prideful to swerve, it culminates in a terrible accident that only harms both parties.

While this more modern idea of brinkmanship and Chicken found its roots during the Cold War, it has since evolved into a notable variation helpful for understanding classic game theory.1 In the context of the recently growing tensions surrounding educational labor strikes, this Game of Chicken can be used to help us understand the economic motivations and reasoning behind these events. More specifically, we can begin to develop a framework for the following question: 

How can game theory explain educational labor strikes and to what extent will they continue to work? 

The Current Dilemma 

In November 2022, we witnessed one of the largest higher educational strikes across the University of California system.2 While the various demands of over 48,000 graduate workers and Ph.D. students were eventually met with resolutions, the growing unrest has only continued to elicit strike surges. 

The beginning of 2023 was marked by labor strikes at Temple University and The University of Illinois Chicago, following suit were Rutgers University, University of Southern California, and Columbia College Chicago. With threats of large-scale class shutdowns, especially during final seasons, these grievances only spell out disaster for students, faculty, and university alike.3 

This issue isn’t limited to higher education or to the United States. All across Canada, namely in Quebec, over half a million public sector workers including public elementary and secondary school teachers have committed to a walkout between December 8th, and December 14th, 2023.4 Ontario saw similar strikes earlier in July, cited as a result of a post-COVID landscape with worker shortages, rampant inflation, and a higher cost of living.5 

With so many fierce disputes, understanding why people go to such lengths to strike becomes increasingly important. After all, from an outsider’s point of view, strikes like these seem to only result in harm to both sides. 

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The Game of Chicken

To understand the rationale behind these seemingly “irrational” labor strikes, let's first examine the Game of Chicken with a classic macroeconomic model: The Nash Equilibrium. 

In short, a Nash Equilibrium helps us understand the best course of action for both parties based on the outcomes. To understand further, let's take an example of 2 people playing a Game of Chicken, with red corresponding to the actions and outcomes for Player A and blue corresponding to Player B. The table above can help us see the utility values (numbers that represent the total benefit from an action or choice) that each individual receives based on a given outcome. Quickly, we can come to four major conclusions:

1. There are two Nash Equilibriums
By tracing the rationales of the two players, we can see that there are two “best” courses of action. If Player A expects Player B to swerve, they will maximize utility by not swerving. On the other hand, if A expects B to charge on, then A should swerve. The potential outcomes are the same for Player B, leaving the upper right box and the lower left box as the most likely outcomes. 

2. Each individual has a different preferred equilibrium
Building off conclusion one, we can see how each player would prefer a different Nash Equilibrium. Player A would find their best outcome to be in the bottom left box, and Player B would find their own in the top right box. This conclusion’s importance will become more apparent when we look at the application of Chicken in labor strikes. 

3. One “off” equilibrium is worse off for both individuals
An off-equilibrium is a cell in our table that is not considered a Nash Equilibrium. In this case, the bottom right is an outcome that has undesirable utility outcomes for both parties. 

4. The other off-equilibrium is better for the loser
In our final cell, the top left, we see that whoever would be the loser of this game would much rather end up in this cell and walk away with 0 utility instead of -5.

These last two conclusions about the Game of Chicken differentiate it from other game theory scenarios, such as the Battle of the Sexes and the Prisoner’s Dilemma. Through these four outcomes, we can start to see the justification behind labor strikes.

Applications of Game Theory in Educational Labor Strikes

Almost all labor-employment relationships for higher education institutes find a balance between the compensation of the workers and the benefits the school receives. However, because of recent shifts against longer tenure periods to weed out overly comfortable, underperforming professors, there has been a greater reliance on contingent faculty and graduate students to help manage classes.6 

A breakdown of the California State University system illuminates this issue.7 In that chart, we can see a decrease from a tenure density of 66.6% to 54% between 2004 and 2021, even though there were nearly 80,000 new students. To add to these issues, instead of colleges taking action to help their employees address increased inflationary pressures and worries about job security, many have instead seized this as an opportunity to drive down labor costs. In the context of Chicken, we can compare the college to Player A driving gas to the pedal. They are hoping for the outcome to be the bottom left, and expect the faculty members to simply accept these practices and “chicken out.” 

Of course, this treatment can only last for so long. If the professors and faculty decide to also step up through the use of strikes, the outcome of the bottom right cell, where both sides suffer, becomes an increasing threat.

In short, we can rationalize the behavior of labor strikes as such: colleges (who we are referencing as Player A in our table) assume that teachers and faculties will simply give in to their practices and hope for the Nash Equilibrium outcome in the bottom left. However, the dissent from teachers eventually boils down to labor strikes threatening large-scale class shutdowns. If we assume the faculty and teachers to be Player B, we can see how they are pushing for the Nash Equilibrium in the top right. 

In the context of “Chicken,” a successful educational strike is one where the college eventually gives in to the demands of the faculty, thus “chickening out” of the game. Both parties hope to reach their Nash Equilibrium, with the looming risk of the disastrous bottom right cell eventually bringing the game to a conclusion at equilibrium. But, with two contrasting goals that have seemingly equal possibilities, how can we determine which outcome is more likely in an educational labor strike?

3rd Parties and Time Pressure

To conclude this game, we need to look at the ideas of 3rd party negotiations and time pressure.

In almost all economic models that involve utility, including our Game of Chicken, utility becomes “discounted” over time. This can be simplified by thinking about an upcoming cellphone you may want to buy. Buying a cellphone today would yield you more utility than if, say, you bought it in 100 days. In the context of negotiations, dragging out resolutions will only harm the utility of both sides: colleges will have to keep their classes shut down and faculty will go unpaid. To bring a sense of time pressure and urgency toward peaceful resolutions, 3rd party negotiations come in. To understand this process, we can trace the resolutions of the 2023 USC labor strike to see how their Game of Chicken unfolded.

Looking at USC’s recent 2023 labor strike timeline, we can see how tensions began building up earlier in the year.8 From February to November, factors such as inflation and increased rent costs eventually culminated in many USC graduate teacher assistants demonstrating their determination to go on strike.9 Eventually, USC themselves came forward to offer a neutral 3rd-party mediation. Given that this was the first-ever negotiation of contracts, we can see how USC became the “chicken” here and gave in to the demands of the graduate students in good faith. With threats of never-seen-before class shutdowns only escalating over time, USC had much more to lose in this situation and chose to be the one to “swerve.” But, although the events on the campus of USC found a positive resolution, it is also important to look at scenarios where both sides decide not to back down.

The True Extent of Labor Strikes 

Since educational labor strikes and any Game of Chicken have two Nash Equilibriums, understanding their extent of effectiveness requires us to think beyond our framework. 

Currently, two equilibriums are created in a Game of Chicken due to those cells being much more favorable than the off equilibriums. However, this situation changes when the utility values become variable. By doing more analysis into what each side has to lose or gain, we can start to model out case-by-case frameworks that can help us predict courses of action. In the case of the USC strike, the faculty were already pushed to such low wages and conditions that they didn’t have much else to lose. On the other hand, USC found themselves able to give more leeway with their resources, as evidenced by the generous contract offers.  

We can apply this thinking to the other cells of our table. Since humans tend to be very risk and loss-averse, the looming threat of the bottom right cell with higher stakes can result in huge changes to outcomes. In the context of educational labor strikes, both sides will often agree on a resolution or yield if they see their problem escalating to the breaking point. After all, it would be disastrous for faculty members to be out of their jobs for extended periods, both for the teachers themselves, and the institution.

At the end of the day, the outcome of the game of Chicken largely relies on discretion and perceived stakes that are on the line for both sides. While the equilibrium is slowly tipping back into place for educational workers, there will soon come a time when Nash’s outcome will shift again in favor of the private interests of institutes. For now, though, we can continue learning about this behavioral framework of Chicken to understand when strikes may be necessary for making reforms to the education system as a whole.

References

  1. The Psychology of Nuclear Brinkmanship | International Security | MIT Press. (n.d.). Retrieved January 7, 2024, from https://direct.mit.edu/isec/article/47/3/9/114669/The-Psychology-of-Nuclear-Brinkmanship
  2. University of California academic workers strike over wages and benefits in largest walkout in U.S. higher education—POLITICO. (n.d.). Retrieved January 7, 2024, from https://www.politico.com/news/2022/11/14/university-california-workers-strike-00066767
  3. Sainato, M. (2023, April 21). ‘Many of us are struggling’: Why US universities are facing a wave of strikes. The Guardian. https://www.theguardian.com/us-news/2023/apr/21/us-universities-wave-strikes
  4. Laframboise, K. (2023, December 7). Why another, longer strike is set for 420,000 public sector workers in Quebec. Global News. Retrieved January 7, 2024, from https://globalnews.ca/news/10154456/quebec-strikes-teachers-nurses-december-2023/
  5. Bai, S. (2023, July 21). A wave of strikes has hit Canada. What does this say about our labour market? Macleans.Ca. https://macleans.ca/society/strikes-employment-union-wages/
  6. College, University Strike Wave Continues Its Swell Into 2023. (n.d.). Retrieved January 7, 2024, from
    https://news.bloomberglaw.com/daily-labor-report/college-university-strike-wave-continues-its-swell-into-2023
  7. The California State University Systemwide Human Resources. (n.d.).Tenure Density Appendix A. Retrieved January 7, 2024, from https://www.aaup.org/sites/default/files/Tenure%20Density%20Appendix%20A.pdf 
  8. Chkarboul, C. (2023, December 7). Developing: Graduate student workers vote to ratify first contract with University. Daily Trojan. https://dailytrojan.com/2023/12/07/usc-gswoc-developing/
  9. USC graduate student workers protest with a ‘last chance picket.’ (2023, November 10). Annenberg Media. https://www.uscannenbergmedia.com/2023/11/09/usc-graduate-student-workers-protest-with-a-last-chance-picket/

About the Author

Ian Hartana

Ian Hartana is an experienced researcher with a background in investing and behavioral finance. Prior to writing for The Decision Lab, he has posted investment analysis on Seeking Alpha and Yahoo Finance. He also writes under Insider Finance to unearth investment psychology and implications of macroeconomic pressures on consumer choices. He often leads webinars to financial literacy nonprofits such as Finatic and Finclusion and has worked on research with a mentor from Capital Group.

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