Commitment and choice of partner in a negotiation with a deadline
AbstractThis paper analyses the effects of partially revocable endogenous commitments of a seller in a negotiation with a deadline. In particular, we examine when commitment is a source of strength, a source of inefficiency and when it does not affect the bargaining outcome at all. We show that when commitment possesses a minimum amount of irrevocability this crucially determines the bargaining outcome. In the bilateral bargaining case, commitment becomes a source of inefficiency since it causes a deadline effect. In the choice of partner framework, however, the deadline effect disappears and there is an immediate agreement and, moreover, commitment becomes a source of strength since it increases the seller's equilibrium payoff by triggering off competition between the buyers.
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Bibliographic InfoArticle provided by Springer in its journal Spanish Economic Review.
Volume (Year): 4 (2002)
Issue (Month): 1 ()
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Find related papers by JEL classification:
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
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- Calabuig, Vicent & Cunyat, Antoni & Olcina, Gonzalo, 2004. "Partially revocable commitments in a negotiation with a deadline," Research in Economics, Elsevier, vol. 58(4), pages 371-380, December.
- Britz Volker, 2010.
"Optimal Value Commitment in Bilateral Bargaining,"
056, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization.
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