On simple contracts, renegotiation under asymmetric information, and the hold-up problem

Patrick Schmitz

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper it is demonstrated that voluntary bargaining over a collective decision under asymmetric information may well lead to ex post efficiency if the default decision is non-trivial. It is argued that the default decision may be interpreted as a 'simple' contract that the parties have written ex ante. This result is used in order to show that simple unconditional contracts which are renegotiated may allow the hold-up problem to be solved, even if the parties' valuations are private information.

Keywords: Contract theory; Private information; Hold-up problem (search for similar items in EconPapers)
JEL-codes: D23 D82 L14 (search for similar items in EconPapers)
Date: 2002
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (42)

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Journal Article: Simple contracts, renegotiation under asymmetric information, and the hold-up problem (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:12530

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