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Optimal deadlines for agreements

Author

Listed:
  • 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)

Abstract

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.

Suggested Citation

  • Damiano, Ettore & Li, Hao & Suen, Wing, 2012. "Optimal deadlines for agreements," Theoretical Economics, Econometric Society, vol. 7(2), May.
  • Handle: RePEc:the:publsh:847
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    References listed on IDEAS

    as
    1. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
    2. Ettore Damiano & Hao Li & Wing Suen, 2008. "Delay in Strategic Information Aggregation," Working Papers tecipa-311, University of Toronto, Department of Economics.
    3. Alvin E. Roth & Axel Ockenfels, 2002. "Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet," American Economic Review, American Economic Association, vol. 92(4), pages 1093-1103, September.
    4. Ponsati, Clara, 1995. "The deadline effect: A theoretical note," Economics Letters, Elsevier, vol. 48(3-4), pages 281-285, June.
    5. Jarque, Xavier & Ponsati, Clara & Sakovics, Jozsef, 2003. "Mediation: incomplete information bargaining with filtered communication," Journal of Mathematical Economics, Elsevier, vol. 39(7), pages 803-830, September.
    6. 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.
    7. Hao Li & Sherwin Rosen & Wing Suen, 2001. "Conflicts and Common Interests in Committees," American Economic Review, American Economic Association, vol. 91(5), pages 1478-1497, December.
    8. Ma, Ching-To Albert & Manove, Michael, 1993. "Bargaining with Deadlines and Imperfect Player Control," Econometrica, Econometric Society, vol. 61(6), pages 1313-1339, November.
    9. Anat R. Admati & Motty Perry, 1987. "Strategic Delay in Bargaining," Review of Economic Studies, Oxford University Press, vol. 54(3), pages 345-364.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Han Feng & David Hobson, 2015. "Gambling in contests modelled with diffusions," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 38(1), pages 21-37, April.
    2. Weng, Xi, 2015. "Can learning cause shorter delays in reaching agreements?," Journal of Mathematical Economics, Elsevier, vol. 60(C), pages 49-62.
    3. repec:eee:indorg:v:53:y:2017:i:c:p:326-352 is not listed on IDEAS
    4. Campbell, Arthur & Ederer, Florian & Spinnewijn, Johannes, 2011. "Time to Decide: Information Search and Revelation in Groups," CEPR Discussion Papers 8531, C.E.P.R. Discussion Papers.
    5. Avni, Shlomit & Filc, Dani & Davidovitch, Nadav, 2015. "The Israeli Medical Association's discourse on health inequity," Social Science & Medicine, Elsevier, vol. 144(C), pages 119-126.
    6. Frommeyer, Tim, 2015. "On Two-Period Committee Voting: Why Straw Polls Should Have Consequences," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112806, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    Repeated proposals; war of attrition; interdependent values;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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