1--- 2meta: 3 date: false 4 reading_time: false 5title: "Hold-Up Problem" 6date: 2023-10-05 7description: "A class of contracting problems where one agent’s pre-contractual investment affects the relative bargaining power between agents, potentially hindering mutual gains from collaboration." 8tags: ["contracting problems", "bargaining power", "investment", "economic theory"] 9--- 10 11## Background 12 13The **hold-up problem** refers to a situation often encountered in economics, business, and contractual engagements where one party is hesitant to make investments due to the fear that subsequent negotiation will shift bargaining power unfavorably, leaving them vulnerable to opportunistic behavior by the other party.