Hold-up induced by demand for fairness: theory and experimental evidence

Abstract Research in recent years suggests that fairness concerns could mitigate hold-up problems. In this study, we report theoretical analysis and experimental evidence on an opposite possibility: also induce our setup, problems will not occur with purely self-interested agents, but theoretically be induced by demand for distributional among agents without sufficiently strong counteracting factors such as intention-based reciprocity. We observe a widespread occurrence of experiment. Relationship-specific investments occurred less than half the time, resulting significant inefficiencies. Moreover, whenever relationship-specific investment was made: (a) it typically reciprocated partner; (b) nor did investor’s offers at bargaining stage exhibit expectations Consequently, partner extracted all additional expected payoff from investments. Further experimentation suggested results were driven fundamental lack reciprocity concerns, rather self-serving bias.