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Holdout: Existence, Information, and Contingent Contracting

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  • Sean M. Collins
  • R. Mark Isaac

Abstract

The holdout problem permeates policy discussions of legal issues involving bargaining for land acquisition and more broadly impacts multilateral bargaining between agents. Laboratory experiments investigate the scope of the holdout problem. The research strategy incorporates as treatment variables available information and the exposure problem arising from the unavailability of contingent contracts. An examination reveals that holdout can reliably produce large inefficiencies and lost opportunities for mutually advantageous trade. The introduction of contingent contracts facilitates successful bargaining. However, buyers are not made significantly better off by contingent contracts.

Suggested Citation

  • 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.
  • Handle: RePEc:ucp:jlawec:doi:10.1086/665830
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    References listed on IDEAS

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    1. Epstein, Richard A, 1993. "Holdouts, Externalities, and the Single Owner: One More Salute to Ronald Coase," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 553-586, April.
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    16. Oliver Hart, 2009. "Hold-up, Asset Ownership, and Reference Points," The Quarterly Journal of Economics, Oxford University Press, vol. 124(1), pages 267-300.
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    Cited by:

    1. repec:kap:expeco:v:20:y:2017:i:2:d:10.1007_s10683-016-9486-z is not listed on IDEAS
    2. Isaac, R. Mark & Kitchens, Carl & Portillo, Javier E., 2016. "Can buyer “mobility” reduce aggregation failures in land-assembly?," Journal of Urban Economics, Elsevier, vol. 95(C), pages 16-30.
    3. repec:kap:copoec:v:28:y:2017:i:3:d:10.1007_s10602-017-9236-z is not listed on IDEAS
    4. Kitchens, Carl & Roomets, Alex, 2015. "Dealing with eminent domain," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 54(C), pages 22-31.

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