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Reputational Bargaining and Deadlines

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  • Jack Fanning

Abstract

I highlight how reputational concerns provide a natural explanation for “deadline effects,” the high frequency of deals prior to a deadline in bargaining. Rational agents imitate the demands of obstinate behavioral types and engage in brinkmanship in the face of uncertainty about the deadline's arrival. I also identify how surplus is divided when the prior probability of behavioral types is vanishingly small. If behavioral types are committed to fixed demands, outcomes converge to the Nash bargaining solution regardless of agents' respective impatience. If behavioral types can adopt more complex demand strategies, outcomes converge to the solution of an alternating offers game without behavioral types for the deadline environment.

Suggested Citation

  • Jack Fanning, 2016. "Reputational Bargaining and Deadlines," Econometrica, Econometric Society, vol. 84, pages 1131-1179, May.
    • Handle: RePEc:wly:emetrp:v:84:y:2016:i::p:1131-1179
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    Cited by:

    1. Alp Simsek & Muhamet Yildiz, 2016. "Durability, Deadline, and Election Effects in Bargaining," NBER Working Papers 22284, National Bureau of Economic Research, Inc.
    2. Send, Jonas & Serena, Marco, 2022. "An empirical analysis of insistent bargaining," Journal of Economic Psychology, Elsevier, vol. 90(C).
    3. Colin F. Camerer & Gideon Nave & Alec Smith, 2019. "Dynamic Unstructured Bargaining with Private Information: Theory, Experiment, and Outcome Prediction via Machine Learning," Management Science, INFORMS, vol. 65(4), pages 1867-1890, April.
    4. Francesc Dilmé, 2021. "The Role of Discounting in Bargaining with One-Sided Offers," ECONtribute Discussion Papers Series 063, University of Bonn and University of Cologne, Germany.
    5. Karagözoğlu, Emin & Keskin, Kerim, 2018. "Time-varying fairness concerns, delay, and disagreement in bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 147(C), pages 115-128.
    6. Emin Karagözoğlu & Martin G. Kocher, 2019. "Bargaining under time pressure from deadlines," Experimental Economics, Springer;Economic Science Association, vol. 22(2), pages 419-440, June.
    7. Abreu, Dilip & Pearce, David G. & Stacchetti, Ennio, 2015. "One-sided uncertainty and delay in reputational bargaining," Theoretical Economics, Econometric Society, vol. 10(3), September.
    8. Mehmet Ekmekci & Hanzhe Zhang, 2021. "Reputational Bargaining with Ultimatum Opportunities," Papers 2105.01581, arXiv.org.
    9. Olivier Bochet & Manshu Khanna & Simon Siegenthaler, 2024. "Beyond Dividing the Pie: Multi-Issue Bargaining in the Laboratory," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(1), pages 163-191.
    10. Anna Sanktjohanser, 2020. "Optimally Stubborn," Cowles Foundation Discussion Papers 2255, Cowles Foundation for Research in Economics, Yale University.
    11. Giri Parameswaran & Hunter Rendleman, 2022. "Redistribution under general decision rules," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(1), pages 159-196, February.
    12. Ortner, Juan, 2023. "Bargaining with evolving private information," Theoretical Economics, Econometric Society, vol. 18(3), July.
    13. Topi Miettinen & Olli Ropponen & Pekka Sääskilahti, 2020. "Prospect Theory, Fairness, and the Escalation of Conflict at a Negotiation Impasse," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(4), pages 1535-1574, October.
    14. Tsoy, Anton, 2018. "Alternating-offer bargaining with the global games information structure," Theoretical Economics, Econometric Society, vol. 13(2), May.
    15. Heggedal, Tom-Reiel & Helland, Leif & Våge Knutsen, Magnus, 2022. "The power of outside options in the presence of obstinate types," Games and Economic Behavior, Elsevier, vol. 136(C), pages 454-468.
    16. Sanktjohanser, Anna, 2022. "Optimally Stubborn," TSE Working Papers 22-1367, Toulouse School of Economics (TSE).
    17. Jonas Send & Marco Serena, 2021. "An Empirical Analysis of Stubborn Bargaining," Working Papers tax-mpg-rps-2021-05, Max Planck Institute for Tax Law and Public Finance.
    18. Bingchao Huangfu & Gagan Ghosh & Heng Liu, 2023. "Resource inequality in the war of attrition," International Journal of Game Theory, Springer;Game Theory Society, vol. 52(1), pages 33-61, March.
    19. Fanning, Jack, 2018. "No compromise: Uncertain costs in reputational bargaining," Journal of Economic Theory, Elsevier, vol. 175(C), pages 518-555.
    20. Marco Serena, 2021. "The value of information on deadlines; successful opaque management," International Journal of Game Theory, Springer;Game Theory Society, vol. 50(2), pages 377-397, June.
    21. Basak, Deepal, 2023. "Bargaining under almost complete information," Journal of Economic Theory, Elsevier, vol. 214(C).
    22. Kim, Wukki & Sandler, Todd, 2021. "Duration and competing-risks determinants of terrorist hostage-taking incidents," European Journal of Political Economy, Elsevier, vol. 70(C).

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