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Commitment and choice of partner in a negotiation with a deadline

  • 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)

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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Article provided by Springer in its journal Spanish Economic Review.

Volume (Year): 4 (2002)
Issue (Month): 1 ()
Pages: 61-78

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Handle: RePEc:spr:specre:v:4:y:2002:i:1:p:61-78
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