We propose a unified framework to study relational contracting and hold-up problems in infinite horizon stochastic games. We first illustrate that with respect to long run decisions, the common formulation of relational contracts as Pareto-optimal public perfect equilibria is in stark contrast...

Game theoretic analysis of relational contracts typically studies Pareto-optimal equilibria of infinitely repeated games. We illustrate with several examples how this equilibrium selection rules out very intuitive hold-up concerns. This becomes apparent only when moving away from the stationary...