HOLD-UP, ASSET OWNERSHIP, AND REFERENCE POINTS
By Oliver Hart. 2007
185 citations recorded by the source corpus.
We study two parties who desire a smooth trading relationship under conditions of value and cost uncertainty. A contract fixing price works well in normal times because there is nothing to argue about. However, when value or cost is unusually high or low, one party will deviate from the contract and hold up the other party, causing deadweight losses as parties withhold cooperation. We show that allocating asset ownership and indexing contracts can reduce the incentives to engage in hold-up. In contrast to much of the literature, the driving force in our model is payoff uncertainty, rather than noncontractible investments.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/0d4121a4f08589d62ac7a2b2539cd7f7affe2289
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Economics and Econometrics
- Tom Vanacker
- Lars Hornuf
- Joern H. Block
- Silvio Vismara
- Armin Schwienbacher
- Andrea Signori
- Paul P. Momtaz
- Douglas J. Cumming
Citations in the corpus
- The entrepreneurial finance markets of the future: a comparison of crowdfunding and initial coin offerings (2020, background): “These authors develop a model based on Hart and Moore (1999) and Hart (2009) and elaborate on the key issue that the quality of a purchased product or service might not be verifiable to the buyer in a world based on blockchain technology using smart contracts.”
- Accounting Information in Financial Contracting: The Incomplete Contract Theory Perspective (2016, unknown): “This explanation for contract “simplicity” has received attention in recent work by Hart and Moore (2008), Hart (2009), and Halonen-Akatwijuka and Hart (2013).”