Published January 2013
| public
Journal Article
Hold-up: with a vengeance
- Creators
- Dufwenberg, Martin
-
Smith, Alec
- Van Essen, Matt
Abstract
When contracts are incomplete or unenforceable, inefficient levels of investment may occur because of hold-up. If individuals care for negative reciprocity, these problems may be reduced, as revenge becomes a credible threat. However, negative reciprocity has this effect only when the investor holds the rights of control of the investment proceeds. We explore this issue analytically, deriving predictions for hold-up games which differ as regards assignment of rights of control. We also test and support these predictions in an experiment.
Additional Information
© 2011 Western Economic Association International. Issue published online: 29 November 2012; article first published online: 8 February 2011. We thank Gary Charness, Yan Chen, Jim Cox, Andrew Daughety, Tore Ellingsen, Ben Hermalin, Georg Kirchsteiger, Jennifer Reinganum, Uzi Segal, Joel Sobel, an anonymous referee, and participants of several seminars for helpful comments, and Bruce Willis and his 1995 team for inspiration for the title. Dufwenberg's research was supported by the NSF (grant # SES-0921929).Additional details
- Eprint ID
- 36410
- Resolver ID
- CaltechAUTHORS:20130115-160201583
- SES-0921929
- NSF
- Created
-
2013-01-16Created from EPrint's datestamp field
- Updated
-
2021-11-09Created from EPrint's last_modified field