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Optimal deadlines for agreements

  • Damiano, Ettore


    (Department of Economics, University of Toronto)

  • Li, Hao


    (Department of Economics, University of British Columbia)

  • Suen, Wing


    (School of Economics and Finance, The University of Hong Kong)

Costly delay in negotiations can induce the negotiating parties to be more forthcoming with their information and improve the quality of the collective decision. Imposing a deadline may result in stalling, in which players at some point stop making concessions but switch back to conceding at the end, or a deadlock, in which concessions end permanently. Extending the deadline hurts the players in the first case but is beneficial in the second. When the initial conflict between the negotiating parties is intermediate, the optimal deadline is positive and finite, and is characterized by the shortest time that would allow efficient information aggregation in equilibrium.

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Article provided by Econometric Society in its journal Theoretical Economics.

Volume (Year): 7 (2012)
Issue (Month): 2 (May)

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Handle: RePEc:the:publsh:847
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  1. Hao Li & Sherwin Rosen & Wing Suen, 1999. "Conflicts and Common Interests in Committees," NBER Working Papers 7158, National Bureau of Economic Research, Inc.
  2. Ettore Damiano & Hao Li & Wing Suen, 2008. "Delay in Strategic Information Aggregation," Working Papers tecipa-311, University of Toronto, Department of Economics.
  3. Fershtman Chaim & Seidmann Daniel J., 1993. "Deadline Effects and Inefficient Delay in Bargaining with Endogenous Commitment," Journal of Economic Theory, Elsevier, vol. 60(2), pages 306-321, August.
  4. Ching-to Albert Ma & Michael Manove, 1991. "Bargaining with Deadlines and Imperfect Player Control," Papers 0007, Boston University - Industry Studies Programme.
  5. Xavier Jarque & Clara Ponsati & Jozsef Sakovics, 2001. "Mediation: Incomplete information bargaining with filtered communication," ESE Discussion Papers 75, Edinburgh School of Economics, University of Edinburgh.
  6. Admati, Anat R & Perry, Motty, 1987. "Strategic Delay in Bargaining," Review of Economic Studies, Wiley Blackwell, vol. 54(3), pages 345-64, July.
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