Schmitz, Patrick W. (2002): On simple contracts, renegotiation under asymmetric information, and the hold-up problem.
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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.
Item Type: | MPRA Paper |
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Original Title: | On simple contracts, renegotiation under asymmetric information, and the hold-up problem |
Language: | English |
Keywords: | Contract theory; Private information; Hold-up problem |
Subjects: | D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior ; Transaction Costs ; Property Rights L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L14 - Transactional Relationships ; Contracts and Reputation ; Networks D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design |
Item ID: | 12530 |
Depositing User: | Patrick W. Schmitz |
Date Deposited: | 06 Jan 2009 06:16 |
Last Modified: | 27 Sep 2019 12:25 |
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URI: | https://mpra.ub.uni-muenchen.de/id/eprint/12530 |