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Endogenous Property Rights in a Hold‐up Experiment
Author(s) -
Erlei Mathias,
Siemer J. Philipp
Publication year - 2014
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/meca.12037
Subject(s) - reciprocal , replicate , economics , property (philosophy) , asset (computer security) , property rights , investment (military) , microeconomics , econometrics , mathematical economics , computer science , mathematics , law , epistemology , statistics , philosophy , political science , linguistics , computer security , politics
In a hold‐up experiment designed to test theoretical predictions following from H art and de M eza and L ockwood regarding investment behavior, S onnemans, O osterbeek and S loof ( SOS ) find only a partial confirmation of theory. According to SOS these deviations from standard theory can be explained by positive reciprocal behavior. In this paper, we replicate the experiment by SOS and add another group of treatments in which asset ownership is endogenized by auctioning off the assets. Our experiment shows that the results by SOS crucially depend on the ownership structure being exogenously assigned by the experimenter. We present experimental evidence that, by and large, corroborates the theoretical predictions made by H art.