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Strategic Delay in Bargaining

Anat R. Admati and Motty Perry
Review of Economic Studies
July, 1987
Vol. 54, Issue 3, Pages 345-364

This paper analyzes a bargaining model with incomplete information in which the time between offers is an endogenous strategic variable. We find equilibria involving a delay to agreement that is due to the use of strategic time delay by bargainers to signal their relative strength. Under some specifications of the parameters, delay is present in the unique sequential equilibrium whose beliefs satisfy one intuitive restriction. This delay does not vanish as the minimal time between offers becomes small.