If a firm anticipates that it is at a risk of being held up,it is more likely to
A)forgo the transaction completely
B)merge with its trading partner
C)exchange "hostages"
D)All the above

Question

​If a firm anticipates that it is at a risk of being held up,it is more likely to
A)​forgo the transaction completely
B)merge with its trading partner
C)exchange "hostages"
D)​All the above

Quizplus · Accepted Answer

When a firm anticipates the risk of being held up, it may take various measures to mitigate this risk. These can include forgoing the transaction completely to avoid potential losses, merging with the trading partner to align interests and reduce the likelihood of opportunistic behavior, or exchanging "hostages," which means giving something of value to the other party to ensure mutual commitment to the deal. All these strategies are aimed at reducing the risk of hold-up and ensuring smoother transactions.

​If a Firm Anticipates That It Is at a Risk

If a Firm Anticipates That It Is at a Risk