Is There a Hold‐up Problem?

Tore Ellingsen and Magnus Johannesson

Scandinavian Journal of Economics, 2004, vol. 106, issue 3, 475-494

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.

Date: 2004
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https://doi.org/10.1111/j.0347-0520.2004.00373.x

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Working Paper: Is There a Hold-up Problem? (2000)
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