William Fuchs∗ Andrzej Skrzypacz
October 5, 2012
Abstract
We study dynamic bargaining with private information in the presence of a deadline.
We show that as commitment power disappears, there is a clear "deadline effect" that is,
trade takes place smoothly before the deadline and with an atom right at the deadline.
The overall pattern of trade and the deadline effect responds to the inefficiency of
not reaching an agreement and the parties’ best alternative to an agreement. Bleaker
disagreement options lead to more trade and proportionally more of the agreements
taking place in the verge of the deadline.