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Bargaining under incomplete information, fairness, and the hold-up problem
[journal article]
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 and thus differ in their bargaining behavior. Ind... view more
"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 and thus differ in their bargaining behavior. 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." [author's abstract]... view less
Keywords
fairness
Classification
Applied Psychology
Free Keywords
Hold-up; Relationship-specific investments; Reciprocity; Asymmetric information; Signalling;
Document language
English
Publication Year
2009
Page/Pages
p. 486-494
Journal
Journal of Economic Behavior & Organization, 71 (2009) 2
DOI
https://doi.org/10.1016/j.jebo.2009.02.007
Status
Postprint; peer reviewed
Licence
PEER Licence Agreement (applicable only to documents from PEER project)