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Bargaining under incomplete information, fairness, and the hold-up problem

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  • von Siemens, Ferdinand A.

Abstract

In the hold-up problem incomplete contracts cause the proceeds of relationship-specific investments to be allocated by bargaining. This paper investigates the corresponding investment incentives if individuals have heterogeneous fairness preferences. Individual preferences are taken to be private information. Investments can then signal preferences and thereby influence beliefs and bargaining behavior. In consequence, individuals might choose high investments in order not to signal information that is unfavorable in the ensuing bargaining.

Suggested Citation

  • von Siemens, Ferdinand A., 2009. "Bargaining under incomplete information, fairness, and the hold-up problem," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 486-494, August.
  • Handle: RePEc:eee:jeborg:v:71:y:2009:i:2:p:486-494
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Sean M. Collins & R. Mark Isaac, 2012. "Holdout: Existence, Information, and Contingent Contracting," Journal of Law and Economics, University of Chicago Press, vol. 55(4), pages 793-814.
    2. Rasch, Alexander & Wambach, Achim & Wiener, Kristina, 2012. "Bargaining and inequity aversion: On the efficiency of the double auction," Economics Letters, Elsevier, vol. 114(2), pages 178-181.
    3. Raphael Studer & Rainer Winkelmann, 2011. "Specification and Estimation of Rating Scale Models: With an Application to the Determinants of Life Satisfaction," SOEPpapers on Multidisciplinary Panel Data Research 372, DIW Berlin, The German Socio-Economic Panel (SOEP).
    4. Hoppe, Eva I. & Schmitz, Patrick W., 2011. "Can contracts solve the hold-up problem? Experimental evidence," Games and Economic Behavior, Elsevier, vol. 73(1), pages 186-199, September.
    5. Juan-José Ganuza & Jos Jansen, 2013. "Too Much Information Sharing? Welfare Effects of Sharing Acquired Cost Information in Oligopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 61(4), pages 845-876, December.
    6. Bierbrauer, Felix & Netzer, Nick, 2016. "Mechanism design and intentions," Journal of Economic Theory, Elsevier, pages 557-603.
    7. Bierbrauer, Felix & Netzer, Nick, 2016. "Mechanism design and intentions," Journal of Economic Theory, Elsevier, vol. 163(C), pages 557-603.
    8. von Siemens, Ferdinand A., 2013. "Intention-based reciprocity and the hidden costs of control," Journal of Economic Behavior & Organization, Elsevier, pages 55-65.
    9. Stefan Kohler, 2012. "Incomplete Information about Social Preferences Explains Equal Division and Delay in Bargaining," Games, MDPI, Open Access Journal, vol. 3(3), pages 1-19, September.
    10. repec:pit:wpaper:491 is not listed on IDEAS
    11. Bruttel, Lisa & Eisenkopf, Gerald, 2012. "No contract or unfair contract: What's better?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(4), pages 384-390.
    12. Ferdinand von Siemens, 2011. "Intention-Based Reciprocity and the Hidden Costs of Control," CESifo Working Paper Series 3553, CESifo Group Munich.
    13. John Duffy & Félix Muñoz-García, 2015. "Cooperation and signaling with uncertain social preferences," Theory and Decision, Springer, pages 45-75.

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