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Commitment and choice of partner in a negotiation with a deadline

Author

Listed:
  • 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)

Abstract

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.

Suggested Citation

  • Vicent Calabuig & Antoni Cunyat & Gonzalo Olcina, 2002. "Commitment and choice of partner in a negotiation with a deadline," Spanish Economic Review, Springer;Spanish Economic Association, vol. 4(1), pages 61-78.
  • Handle: RePEc:spr:specre:v:4:y:2002:i:1:p:61-78
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    Citations

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    Cited by:

    1. Britz Volker, 2010. "Optimal Value Commitment in Bilateral Bargaining," Research Memorandum 013, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    2. 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.
    3. Britz Volker, 2010. "Optimal Value Commitment in Bilateral Bargaining," Research Memorandum 056, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).

    More about this item

    Keywords

    Bargaining; revocable commitment; thin market; deadline effect;

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - 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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