Patrick W. Schmitz
European Economic Review, Vol. 46 (1), 2002, 169-188.
Abstract. In this article it is demonstrated that voluntary bargaining over a collective decision under asymmetric information may well lead to ex post efficiency if the default decision is non-trivial. It is argued that the default decision may be interpreted as a 'simple' contract that the parties have written ex ante. This result is used in order to show that simple unconditional contracts which are renegotiated may allow the hold-up problem to be solved, even if the parties' valuations are private information.
The working paper version is available for download at SSRN.
The paper is available for download.