Is There a Hold‐up Problem? |
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Authors: | Tore Ellingsen Magnus Johannesson |
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Institution: | Stockholm School of Economics, Sweden; Stockholm School of Economics, Sweden |
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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. |
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Keywords: | Bargaining fairness communication coordination |
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