“ Take It or Leave It ” Offers : Obstinacy and Endogenous Deadlines in Negotiations ∗ Selçuk Özyurt

A bargainer uses “take it or leave it” offers to signal that he is not willing to make further concessions (commitment threat) and that he will leave the bargaining table unless his demand is accepted (exit threat). This paper investigates the impact of these threats on rational negotiators’ equilibrium shares and behavior in a bilateral negotiation. The threats are credible because the negotiators are assumed to have the opportunity of mimicking obstinate types—who, for some reason, are constrained to implement their threats—and to build reputation on their obstinacy. The existence of the endogenous deadline option for one of the players has two main effects: (1) it renders the deal unique and efficient, and (2) shifts the bargaining power towards the player who can influence the deadline.