We study dynamic bargaining with private information and a deadline.
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. Prices, timing of trade, and the deadline
effect respond to the consequences of not reaching an agreement.
Bleaker disagreement options lead to more trade and proportionally
more of the agreements taking place on the verge of the deadline.
Time to deadline can affect the overall efficiency of the equilibrium
nonmonotonically. For intermediate deadlines, efficiency is improved
if agents face bleaker prospects after deadline.
"Bargaining with Deadlines and Private Information."
American Economic Journal: Microeconomics,
Bargaining Theory; Matching Theory
Asymmetric and Private Information; Mechanism Design