A Simple Economic Teaching Experiment on the Hold-Up Problem
The hold-up problem is central to the theory of incomplete contracts. This can occur if, after making a sunk investment in a relationship, one party can be taken advantage of by the other party, leading to inefficient underinvestment. The authors describe a simple teaching experiment that illustrates the hold-up problem, and address how to integrate it into a class.
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Volume (Year): 43 (2012)
Issue (Month): 4 (October)
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