Split it up to create incentives: Investment, public goods and crossing the river

• 成果类型: Article
• 署名作者: Martin, Simon; Schlag, Karl H.
• 署名单位: Heinrich Heine University Dusseldorf; University of Vienna
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2020.105092
• 发表日期: 2020
• 关键词: hold-up problem; epsilon-subgame perfect equilibrium; finite horizon; Enforcement without contracts; gradualism

摘要

When should one pay the ferryman? When to pay for the delivery of a good, and how should one invest in a public good if there is a single transaction and institutions are costly? We show how to solve the hold-up problem. The idea is to appropriately split up the desired total contribution into several separate contributions that are made in sequence, with each party threatening to discontinue if others deviate. Our solution concept is based on subgame perfection, where players are either selfish and do not care about very small gains or are socially minded as long as there is no deviation. (c) 2020 Elsevier Inc. All rights reserved.