This paper shows that giving a player an outside option can worsen his payoff in a bargaining game with strategic delay. If the seller has the option to terminate bargaining and sell the good on the spot market, this can limit the ability of a low-valuation buyer to use delayed responses to...

It is well-known that a monopolist cannot commit to offer a high-quality contract to a consumer reading costs are positive. This paper shows that this also holds in a competitive environment with consumer heterogeneity if the contract space is unrestricted. If firms can offer standardized...

Theory predicts that default breach remedies are immaterial whenever contracting costs are negligible. Some experimental studies, however, suggest that in practice default rules do matter, as they may affect parties' preferences over contract terms. This paper presents results from an experiment...