Can contracts solve the hold-up problem? Experimental evidence

► We study in the lab if contracts can solve the hold-up (underinvestment) problem. ► We consider investments by the seller that increase the buyerʼs valuation. ► Fixed-price contracts do not lead to more investments. ► Non-renegotiable option contracts solve the hold-up problem. ► Renegotiable option contracts acting as reference points still foster investments.