Randolph Sloof
Amsterdam School of Economics



(Tuesday, 22nd May 2007)

Title : The experimental evaluation of (contractual solutions to) the hold-up problem

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In a world with incomplete contracts, relationship-specific investments are vulnerable to appropriation by the trading partner. Without contractual safeguards, parties are then predicted to underinvest. This celebrated holdup problem is considered key in a wide variety of economic contexts and many theoretical solutions therefore have been proposed. In this workshop we will discuss the empirical evaluation of both the extent of the holdup problem and the effectiveness of (some of) the suggested remedies by means of laboratory experiments.

Bibliographical references :

Must read reference : Sloof, R., Sonnemans, J. and H. Oosterbeek, Underinvestment in training?, book chapter to appear in: J. Hartog and H. Maassen van den Brink, Human Capital: Moving the frontier, Cambridge University Press.

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Leuven, E., Oosterbeek, H., Sloof, R. and C. van Klaveren, 2005, Worker reciprocity and employer investment in training, Economica 72, 137-149.

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Sloof, R., Oosterbeek, H., and J. Sonnemans, forthcoming, Does making specific investments unobservable boost investment incentives?, Journal of Economics and Management Strategy.

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Sloof, R., J. Sonnemans and H. Oosterbeek, 2004, Specific investments, holdup, and the outside option principle, European Economic Review 48, 1399-1410.

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