How Effective Can Ex Post Destruction Alleviate the Hold-up Problem?

• Main Authors: WANG, Huan, ZHANG, Juyuan, ZHANG, Yi
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2014
• Subjects: Hold-up; Homo Reciprocans; Destruction Intensity; Uninformedness; Behavioral Economics; Economics
• Online Access: https://ink.library.smu.edu.sg/soe_research/1755; https://ink.library.smu.edu.sg/context/soe_research/article/2754/viewcontent/Ex_Post_Destruction_Hold_up_Problem_2014_wp.pdf
• Institution: Singapore Management University

We first investigate whether or not ex post destruction can possibly alleviate the hold-up problem in a one-shot game between a supplier and a buyer. The answer is yes but only when the buyer believes that the supplier might be a Homo reciprocans agent with sufficiently strong propensity for reciproc...