Writers Unlikely to Find Happy Ending in Strike

Strikes typically cost both parties more than they’re warring over, but labor relations aren’t “economically rational,” explains the New Yorker’s James Surowiecki, due to “asymmetric information.” Hollywood’s writers simply don’t know the underlying financial truth behind online revenues—the meat of the dispute—and can only uncover a bluff by walking out. But if neither side is likely to win big, why the over-confidence?

“Self-serving bias” is the other key to understanding strikes: The producers have likely been convinced by their own self-interest that they’re in the right. And fairness rules when rational behavior takes a back seat—that is, both sides are willing to take a financial hit to preserve their principle. "In labor relations," Surowiecki concludes, "the bottom line isn’t always the bottom line." (More Hollywood writers' strike stories.)