The role of strategic delay is analyzed in an infinite-horizon alternating-offer model of bargaining. A buyer and seller are engaged in the trade of a single object. Both bargainers have private information about their own preferences and are impatient in that delaying agreement is costly. An equilibrium is constructed in which the bargainers signal the strength of their bargaining positions by delaying prior to making an offer. A bargainer expecting large gains from trade is more impatient than one expecting small gains, and hence makes concessions earlier on. Trade occurs whever gains from trade exist, but due to the private information, only after costly delay. Panmunjom, Korea—(UPI)—The American general and the North Korean general glared at each other across the table and the only sound was the wind howling across the barren hills outside their hut. Maj. Gen. James B. Knapp, negotiator for the United Nations Command (UNC), was waiting for Maj. Gen. Ri Choonsun of the Democratic People's Republic of North Korea to propose a recess. They sat there, arms folded, for 4| hours. Not a word. Finally, Gen. Ri got up, walked out and drove away. —Evening Bulletin, Philadelphia (11 April 1969)

We develop a private-information model of union contract negotiations in which disputes signal a firm's willingness to pay. Previous models have assumed that all labor disputes take the form of a strike. Yet a prominent feature of U.S. collective bargaining is the holdout: negotiations often continue without a strike after the contract has expired. Production continues with workers paid according to the expired contract. We analyze the union's decision to strike or hold out and highlight its importance to strike activity. Strikes are more likely to occur after a drop in the real wage or a decline in unemployment.