Vicent Calabuig () (Department of Economic Analysis, University of Valencia, Campus dels Tarongers, Av/ dels Tarongers s/n. Edifici Departamental Oriental. 46022 Valencia, Spain) Antoni Cunyat () (Department of Economic Analysis, University of Valencia, Campus dels Tarongers, Av/ dels Tarongers s/n. Edifici Departamental Oriental. 46022 Valencia, Spain) Gonzalo Olcina () (Department of Economic Analysis, University of Valencia, Campus dels Tarongers, Av/ dels Tarongers s/n. Edifici Departamental Oriental. 46022 Valencia, Spain)
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This 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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