Is There a Hold-Up Problem?

20 Pages Posted: 8 Dec 2004

See all articles by Tore Ellingsen

Tore Ellingsen

Stockholm School of Economics - Department of Economics; Norwegian School of Economics (NHH) - Department of Economics

Magnus Johannesson

Stockholm School of Economics - Department of Economics

Abstract

We report on a hold-up experiment in which unilateral investment is followed by bilateral bargaining according to Nash's demand game. Without communication, investment is low and coordination is poor. Unilateral communication facilitates coordination, but not perfectly. Successful coordination predominantly entails "fair" outcomes. Perhaps surprisingly, sellers (investors) do at least as well under buyer communication as under seller communication.

Suggested Citation

Ellingsen, Tore and Johannesson, Magnus, Is There a Hold-Up Problem?. Available at SSRN: https://ssrn.com/abstract=623338

Tore Ellingsen (Contact Author)

Stockholm School of Economics - Department of Economics ( email )

P.O. Box 6501
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Norwegian School of Economics (NHH) - Department of Economics

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N-5035 Bergen
Norway

Magnus Johannesson

Stockholm School of Economics - Department of Economics ( email )

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