Is There a Hold-up Problem?
Version of Record online: 22 NOV 2004
The Scandinavian Journal of Economics
Volume 106, Issue 3, pages 475–494, September 2004
How to Cite
Ellingsen, T. and Johannesson, M. (2004), Is There a Hold-up Problem?. The Scandinavian Journal of Economics, 106: 475–494. doi: 10.1111/j.0347-0520.2004.00373.x
- Issue online: 22 NOV 2004
- Version of Record online: 22 NOV 2004
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.