A simple economic teaching experiment on the hold-up problem

The hold-up problem is central to the theory of incomplete contracts. This can occur if, after making a sunk investment in a relationship, one party can be taken advantage of by the other party, leading to inefficient underinvestment. The authors describe a simple teaching experiment that illustrate...

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Veröffentlicht in:	The Journal of economic education 2012-10, Vol.43 (4), p.377-385
Hauptverfasser:	Balkenborg, Dieter, Kaplan, Todd R, Miller, Timothy
Format:	Artikel
Sprache:	eng
Schlagworte:	Bargaining power Class Activities Class discussion classroom experiments College Instruction Computer software Computer Uses in Education Contracts Design ECONOMIC INSTRUCTION Economic theory Economics Education Experiment Experiments Fixed price contracts Game theory hold-up problem Lehren Military training Pedagogy Problem Raw material costs Return on investment Studies subgame perfection Teaching Undergraduate Study Wirtschaft
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Beschreibung
Zusammenfassung:	The hold-up problem is central to the theory of incomplete contracts. This can occur if, after making a sunk investment in a relationship, one party can be taken advantage of by the other party, leading to inefficient underinvestment. The authors describe a simple teaching experiment that illustrates the hold-up problem, and address how to integrate it into a class.
ISSN:	0022-0485 2152-4068
DOI:	10.1080/00220485.2012.714310