[pretendscholar]

That's a theory that only models certain market conditions. In practice there is an information asymmetry (contrary to the presuppositions of the Nash Equilibrium) and often the employer side has a small number of companies so coordination is easier. Check out this settlement from the 2000s in Silicon Valley[1]. This involves highly desired, well educated employees so imagine how it is in other fields.

In my own experience I've had several prospective employers at conferences say that they were interested in poaching me but mentioned that they were wary to start a poaching war. They knew the CEO of my company and were conscious of the fact that he would likely make an effort to respond in kind. The Nash Equilibrium is an interesting concept but reality is complex and messy.

[1] https://equitablegrowth.org/aftermath-wage-collusion-silicon...

[bayesian_horse]

That is a particularly niche situation...

[pretendscholar]

Take your pick. Even just in the tech sector in silicon valley there are many examples of collusion. Mind you this involves some of the most desirable employees on the planet.

But back to the central point the basic nash equilibrium is in the spherical cow realm of models as they relate to actual reality. There are some interesting additions to it involving time series and asymmetrical information to try and model real economic data.