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Is There a Hold-up Problem?

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  • Tore Ellingsen
  • Magnus Johannesson

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. Copyright The editors of the "Scandinavian Journal of Economics", 2004 .

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Article provided by Wiley Blackwell in its journal The Scandinavian Journal of Economics.

Volume (Year): 106 (2004)
Issue (Month): 3 (October)
Pages: 475-494

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Handle: RePEc:bla:scandj:v:106:y:2004:i:3:p:475-494

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