Repeated Relationship And Social Reputation

The hold-up problem is one of the most important issues in modern contract theory and institutional economics.Due to the iocompleteness of the contract,the amount of investment and return in the bilateral relationship can be observed by both parties but cannot be verified by the third party.When there is the possibility of hold-up,the investment parties of specific investment will underinvest in advance due to their foreknowledge of the hold-up problem,which will result in low economic efficiency(Williamson,1985).Previous studies have proposed different solutions in the fields of property rights eassignment,contract governance and introducing competition.This paper studies the effect of two connotations of reputation,one is two parties repeating the transaction through the relational governance of self-enforcement,and the social reputation fonned by the effective transmission of transaction information within the community.In previous studies,there are few empirical studies on the problem of hold-up,and the comparative study on governance mechanism is still in the theoretical stage.This paper adopts the economic experimental method,collects data through experiments,introduces the ultimatum game and BDM trust game theory in the experimental design,and sets up three groups of experiments,namely,the hold-up control group,the repeated relationship group,and the social reputation group,to study the efifects of repeated relationship and social reputation on hold-up problem and investment.The effectiveness of the two mechanisras is compared to provide experimental basis for lessening or mitigating the hold-up problem and investment promotion.In this paper,the experimental reference framework of Berg,Dickhaut and McCabe(1995)and Ellingsen and Johannesson(2004),divides the two sides of the bilateral transaction into seller S who needs to make specific investment decisions and buyer B who needs to allocate the income of investment.The hold-up control group,repeated relationship group and social reputation group were programmed by z-tree software,and subjects were recruited to conduct paid experiments to obtain the data in this paper.Through the analysis and comparison of experimental data,according to the results of non-paranetric test and regression,it is found that,firstly,when there is no hold-up governance mechanism,hold-up will occur,and the income distributor with bargaining power will occupy most of the income.Secondly,both mechanisms of repeated relationship and social reputation can promote the improvement of pre-investment level,increase the return ratio of distributors to investors,and inhibit opportunistic behavior.Thirdly,by comparing the effect of two mechanisms of repeated relationship and social reputation,it is found that the two mechanisms have significant differences in the influence on the level of investment,and the promotion degree of social reputation mechanism to social investment is significantly higher than that of repeated relationship mechanism.However,there is no significant difference between the two mechanisms in the influence of distributive behavior.Finally,by establishing a mediating effect model and taking ratio as an intermediate variable,the conclusion is that there is a mediating effect in the model.The mediating variable ratio plays a foll mediating role in the effect of repetition on investment,and a partial mediating role in the effect of social reputation on investment.Based on the above analysis and conclusions,this paper puts forward corresponding policy suggestions from five aspects:strengthening enterprise risk management,establishing relationship norms,strengthening the construction of industry associations,cultivating reputation capital and strengthening the disclosure of reputation information.Finally,based on the research of the whole paper,This paper puts forward some suggestions for further research in the field of experimental economics for lessening the hold-up problem.