The internationally recognized and flagship worker cooperative Fagor Electrodomésticos was founded in 1956 and was heralded as a success story before declaring bankruptcy in 2013. In this thesis, I examine the existing literature regarding worker cooperatives and provide historical background on Fagor Electrodomésticos. I then focus on one of the factors credited by the literature as contributing to its failure and other worker cooperatives broadly, the internal decision-making process. To analyze the role of the internal decision-making process I develop a game-theoretic model that sheds light on the dynamics of this process. This model contains three actors each of whom attempt to maximize their payoffs by advocating within a three-node game tree. This approach illustrates that in times of economic downturn actors with higher preferences for labor over profit will forestall employment cuts that are required for the firm to remain profitable or break-even and might operate at a loss to avoid necessary employment reductions. I then introduce costs when one or more actors employ their vetoes in a way that can prevent the delay of necessary unemployment reductions for firm survival.
Bachelor of Science (B.S.)
College of Sciences
Politics, Security, and International Affairs
Political Science; Economics
Williams, Bradley C., "Worker Cooperatives And Globalization: A Case Study Of Fagor Electrodométicos Utilizing Game Theory" (2022). Honors Undergraduate Theses. 1221.