Economists typically analyze individuals' market behavior in isolation from their nonmarket decisions. While this research strategy has generally been successful, it can lead to systematic errors when agents' nonmarket behavior affects their market choices. In this paper we analyze how...

Do investors making complementary investments face the correct incentives, especially when they cannot contract with each other prior to their decisions? We present a two-sided matching model in which buyers and sellers make investments prior to matching. Once matched, buyer and seller bargain...

Investors making complementary investments typically do not have incentives to invest efficiently when they cannot contract with each other prior to their decisions because of the hold-up problem: when they bargain over the surplus generated by their investments, they will usually not obtain the...