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Information control in the hold‐up problem

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  • Anh Nguyen
  • Teck Yong Tan

Abstract

We study the use of information control to mitigate hold‐up risks. We identify a distinction between asymmetric information that creates an ex ante investment incentive and asymmetric information that causes ex post inefficiency, which then allows ex post inefficiency to be eliminated without compromising the ex ante investment incentive. We characterize the properties of the optimal information structure and the payoffs and welfare achievable with information control in the presence of hold‐up risks.

Suggested Citation

  • Anh Nguyen & Teck Yong Tan, 2019. "Information control in the hold‐up problem," RAND Journal of Economics, RAND Corporation, vol. 50(4), pages 768-786, December.
    • Handle: RePEc:bla:randje:v:50:y:2019:i:4:p:768-786
    DOI: 10.1111/1756-2171.12295
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    Cited by:

    1. Pedro Manuel Nogueira Reis & António Pedro Soares Pinto, 2022. "How Do Banking Characteristics Influence Companies’ Debt Features and Performance during COVID-19? A Study of Portuguese Firms," IJFS, MDPI, vol. 10(4), pages 1-29, October.
    2. Daehong Min, 2021. "Bayesian persuasion under partial commitment," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 72(3), pages 743-764, October.
    3. Shufen Tang & Yuqing Zheng & Taiping Li & Li Zhou, 2021. "The hold‐up problem in China's broiler industry: Empirical evidence from Jiangsu Province," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 69(4), pages 539-554, December.
    4. Vasudha Jain & Mark Whitmeyer, 2021. "Search and Competition with Flexible Investigations," Papers 2104.13159, arXiv.org.
    5. Tan, Teck Yong, 2023. "Optimal transparency of monitoring capability," Journal of Economic Theory, Elsevier, vol. 209(C).

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