An evolutionary inspection game with labour unions on small-world networks

We study an evolutionary inspection game where agents can chose between working and shirking. The evolutionary process is staged on a small-world network, through which agents compare their incomes and, based on the outcome, decide which strategy to adopt. Moreover, we introduce union members that have certain privileges, of which the extent depends on the bargaining power of the union. We determine how the union affects the overall performance of the firm that employs the agents, and what are its influences on the employees. We find that, depending on its bargaining power, the union has significant leverage to deteriorate the productivity of a firm, and consequently also to lower the long-run benefits of the employees.