IDEAS home Printed from https://ideas.repec.org/a/mhr/jinste/urnsici0932-4569(200306)1592_323iabijv_2.0.tx_2-r.html
   My bibliography  Save this article

Investment and Bargaining in Joint Ventures: A Family Decision Making Experiment

Author

Listed:
  • Werner Güth
  • Radosveta Ivanova-Stenzel
  • Matthias Sutter
  • Hannelore Weck-Hannemann

Abstract

Bilateral joint ventures, such as marriage, are economically inspired by their prospects of labor division and specialization. However, specialization makes the partnerwho investsmore in relation-specificqualificationsmore exploitable (holdup problem). In a two-person experiment we study investment and bargaining behavior when specialization improves the chances to win a large prize. A low (full) joint venture relies on an intermediate (high) degree of specialization and low (high) costs in case of failure, e.g., a divorce. Results show that participants choose endogenouslymore efficient joint-venture types and acceptminor attempts at exploitation when bargaining over the revenues of the joint venture.

Suggested Citation

  • Werner Güth & Radosveta Ivanova-Stenzel & Matthias Sutter & Hannelore Weck-Hannemann, 2003. "Investment and Bargaining in Joint Ventures: A Family Decision Making Experiment," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 159(2), pages 323-341, June.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200306)159:2_323:iabijv_2.0.tx_2-r
    as

    Download full text from publisher

    File URL: https://www.mohrsiebeck.com/en/article/investment-and-bargaining-in-joint-ventures-a-family-decision-making-experiment-1016280932456032974826
    Download Restriction: Fulltext access is included for subscribers to the printed version.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1063-1093, Nov.-Dec..
    2. Kreps, David M & Wilson, Robert, 1982. "Sequential Equilibria," Econometrica, Econometric Society, vol. 50(4), pages 863-894, July.
    3. Browning, Martin & Francois Bourguignon & Pierre-Andre Chiappori & Valerie Lechene, 1994. "Income and Outcomes: A Structural Model of Intrahousehold Allocation," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1067-1096, December.
    4. Eckel, Catherine C & Grossman, Philip J, 1998. "Are Women Less Selfish Than Men? Evidence from Dictator Experiments," Economic Journal, Royal Economic Society, vol. 108(448), pages 726-735, May.
    5. David de Meza & Ben Lockwood, 1998. "Does Asset Ownership Always Motivate Managers? Outside Options and the Property Rights Theory of the Firm," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(2), pages 361-386.
    6. James Andreoni & Lise Vesterlund, 2001. "Which is the Fair Sex? Gender Differences in Altruism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(1), pages 293-312.
    7. Manser, Marilyn & Brown, Murray, 1980. "Marriage and Household Decision-Making: A Bargaining Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(1), pages 31-44, February.
    8. Apps, Patricia F. & Rees, Ray, 1988. "Taxation and the household," Journal of Public Economics, Elsevier, vol. 35(3), pages 355-369, April.
    9. Lundberg, Shelly & Pollak, Robert A, 1993. "Separate Spheres Bargaining and the Marriage Market," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 988-1010, December.
    10. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817.
    11. M. R. Rosenzweig & Stark, O. (ed.), 1997. "Handbook of Population and Family Economics," Handbook of Population and Family Economics, Elsevier, edition 1, volume 1, number 1.
    12. Kohlberg, Elon & Mertens, Jean-Francois, 1986. "On the Strategic Stability of Equilibria," Econometrica, Econometric Society, vol. 54(5), pages 1003-1037, September.
    13. Werner Güth & Radosveta Ivanova‐Stenzel & Sigve Tjotta, 2004. "Please, Marry Me! An Experimental Study of Risking a Joint Venture," Metroeconomica, Wiley Blackwell, vol. 55(1), pages 1-21, February.
    14. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Leanne Roncolato & Alex Roomets, 2020. "Who will change the “baby?” Examining the power of gender in an experimental setting," Review of Economics of the Household, Springer, vol. 18(3), pages 823-852, September.
    2. Werner Güth & Radosveta Ivanova‐Stenzel & Sigve Tjotta, 2004. "Please, Marry Me! An Experimental Study of Risking a Joint Venture," Metroeconomica, Wiley Blackwell, vol. 55(1), pages 1-21, February.
    3. Smith, Ian, 2007. "Property division on divorce with inequity aversion," International Review of Law and Economics, Elsevier, vol. 27(2), pages 111-128.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Werner Güth & Radosveta Ivanova‐Stenzel & Sigve Tjotta, 2004. "Please, Marry Me! An Experimental Study of Risking a Joint Venture," Metroeconomica, Wiley Blackwell, vol. 55(1), pages 1-21, February.
    2. Olivier Bargain & Miriam Beblo & Denis Beninger & Richard Blundell & Raquel Carrasco & Maria-Concetta Chiuri & François Laisney & Valérie Lechene & Nicolas Moreau & Michal Myck & Javier Ruiz-Castillo , 2006. "Does the Representation of Household Behavior Matter for Welfare Analysis of Tax-benefit Policies? An Introduction," Review of Economics of the Household, Springer, vol. 4(2), pages 99-111, June.
    3. Chiappori, Pierre-André & Donni, Olivier, 2009. "Non-unitary Models of Household Behavior: A Survey of the Literature," IZA Discussion Papers 4603, Institute of Labor Economics (IZA).
    4. Anyck Dauphin & Bernard Fortin & Guy Lacroix, 2018. "Is consumption efficiency within households falsifiable?," Review of Economics of the Household, Springer, vol. 16(3), pages 737-766, September.
    5. Jara-Díaz, Sergio & Rosales-Salas, Jorge, 2017. "Beyond transport time: A review of time use modeling," Transportation Research Part A: Policy and Practice, Elsevier, vol. 97(C), pages 209-230.
    6. Alberto Alesina & Andrea Ichino & Loukas Karabarbounis, 2011. "Gender-Based Taxation and the Division of Family Chores," American Economic Journal: Economic Policy, American Economic Association, vol. 3(2), pages 1-40, May.
    7. Laurens Cherchye & Sam Cosaert & Thomas Demuynck & Bram De Rock, 2020. "Group Consumption with Caring Individuals," The Economic Journal, Royal Economic Society, vol. 130(627), pages 587-622.
    8. Laurens CHERCHYE & Thomas DEMUYNCK & Bram DE ROCK, 2010. "Noncooperative household consumption with caring," Working Papers of Department of Economics, Leuven ces10.34, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    9. Miriam Beblo & Denis Beninger, 2017. "Do husbands and wives pool their incomes? A couple experiment," Review of Economics of the Household, Springer, vol. 15(3), pages 779-805, September.
    10. J. Gimenez-Nadal & Jose Molina, 2013. "Parents’ education as a determinant of educational childcare time," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(2), pages 719-749, April.
    11. Xu, Zeyu, 2007. "A survey on intra-household models and evidence," MPRA Paper 3763, University Library of Munich, Germany.
    12. Luis Rubalcava & Graciela Teruel & Duncan Thomas, 2009. "Investments, Time Preferences, and Public Transfers Paid to Women," Economic Development and Cultural Change, University of Chicago Press, vol. 57(3), pages 507-538, April.
    13. Laurens Cherchye & Thomas Demuynck & Bram De Rock, 2011. "Revealed Preference Analysis of Non‐Cooperative Household Consumption," Economic Journal, Royal Economic Society, vol. 121(555), pages 1073-1096, September.
    14. Robert V. Breunig & Rebecca J. McKibbin, 2012. "Income Pooling between Australian Young Adults and Their Parents," LABOUR, CEIS, vol. 26(2), pages 235-265, June.
    15. Mizuki Komura, 2013. "Tax reform and endogenous gender bargaining power," Review of Economics of the Household, Springer, vol. 11(2), pages 175-192, June.
    16. Smith, V. Kerry & Van Houtven, George, 1998. "Non-Market Valuation and the Household," RFF Working Paper Series dp-98-31, Resources for the Future.
    17. GholamReza Haddad, 2015. "Gender ratio, divorce rate, and intra-household collective decision process: evidence from iranian urban households labor supply with non-participation," Empirical Economics, Springer, vol. 48(4), pages 1365-1394, June.
    18. Martin Browning & Valérie Lechene, 2001. "Caring and Sharing: Tests Between Alternative Models of Intra-household Allocation," Discussion Papers 01-07, University of Copenhagen. Department of Economics.
    19. Robert Pollak, 2003. "Gary Becker's Contributions to Family and Household Economics," Review of Economics of the Household, Springer, vol. 1(1), pages 111-141, January.
    20. Jara-Díaz, Sergio & Candia, Diego, 2020. "A new look at the value of leisure in two-worker households," Economics of Transportation, Elsevier, vol. 24(C).

    More about this item

    JEL classification:

    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mhr:jinste:urn:sici:0932-4569(200306)159:2_323:iabijv_2.0.tx_2-r. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Thomas Wolpert (email available below). General contact details of provider: https://www.mohrsiebeck.com/jite .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.