Commitment and choice of partner in a negotiation with a deadline
ISSN: 1435-5469
Año de publicación: 2002
Volumen: 4
Número: 1
Páginas: 61-78
Tipo: Artículo
Otras publicaciones en: Spanish economic review
Resumen
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.