First-mover advantage decides bargaining when commitments are costless and binding

Evidence

Consider a culture in which “cross my heart” is universally recognized as absolutely binding. Any offer accompanied by this invocation is a final offer, and is so recognized. If each party knows the other’s true reservation price, the object is to be first with a firm offer. Complete responsibility for the outcome then rests with the other, who can take it or leave it as he chooses (and who chooses to take it). Bargaining is all over; the commitment (that is, the first offer) wins. — Thomas C. Schelling, The Strategy of Conflict, 69

Categorization

• XREF: Directly parallels Milgrom-North-Weingast private judges: the first party to establish a legally binding position (via the ‘law merchant’) wins when arbitration is trusted. Also recalls Don Corleone’s insistence on being approached first and setting the terms. — connects to: Leaving a final standing offer is a winning commitment tactic. — Thomas C. Schelling, The Strategy of Conflict, 636; Binding oneself can paradoxically strengthen one’s bargaining position — Thomas C. Schelling, The Strategy of Conflict, 60; Commitment converts an indeterminate bargaining situation into a determinate two-move game — Thomas C. Schelling, The Strategy of Conflict, 289 (+2 more)

Related

• Leaving a final standing offer is a winning commitment tactic. (similarity 0.82)

Broader Connections

• Commitment converts an indeterminate bargaining situation into a determinate two-move game #expands (0.82) — Thomas C. Schelling, The Strategy of Conflict, 289