Information Control in the Hold-up Problem∗
نویسندگان
چکیده
Hold-up risks can be mitigated by creating asymmetric information about the investment using information control. In this paper, we study the investment level and welfare achievable with information control and the information structure that implements them. Our main result identifies a separation between information that creates ex-ante investment incentive and information that causes ex-post inefficiency. Contrary to results suggested in the literature, ex-ante investment incentive is only limited by the relative cost and benefit of the investment, while ex-post inefficiency can be eliminated without compromising the ex-ante investment incentive.
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