Lecture Topic:The Effect of Inequality on Relation Specific Investment and Hold Up: A Cross-Cultural Examination

Lecturer:Rudy Santore

Lecture Time:November 12, 2019 (Tuesday), 14:30

Lecture Location: Boxue Building B407

Host Organizations:

School of Business Administration (MBA Education Center)

SWPU Department of Science and Technology

Abstract:

The hold-up problem can arise between a buyer and a seller when contracts are incomplete and seller investment is buyer specific. In such circumstances there can be too little investment if sellers expect to be held up. There can also be bargaining failure if sellers who do invest refuse to accept“unfair”offers. Our experiment investigates the role of inequality on the hold-up problem by varying the initial endowments of the buyer and sellers. The research also investigated the role of culture by comparing behavior of Chinese subjects and US subjects. Inequality has a bigger impact on US investment than Chinese subjects. Chinese sellers invest at higher rates than US subjects, but they demand higher prices than US sellers resulting in more bargaining failures.

About the Lecturer:

Rudy Santore, associate professor at Department of Economics, University of Tennessee. He is engaged in studies of industrial organizational theory, game theory and information economics. He is invited member of American Economic Association, American Academy of Financial Management, American Law & Economics Association, South American Economics Association and the European Economic Association, and invited reviewer of 25 top-level academic journals, including American Economic Review, European Journal of Political Economy, Journal of Economic Behavior & Organization, Journal of Law, Economics and Organization, Economic Inquiry, Journal of Public Economic Theory, Journal of Economic Education, Economics Bulletin, and the China Economic Review. He has published more than 20 papers on top SSCI journals including European Journal of Political Economy, Journal of Economic Behavior & Organization, Journal of Law, Economics and Organization and Economic Inquiry.