Post-investment opportunism exploits sunk asset and verification costs.

Evidence

Once the investment is made, however, the subcontractor’s vulnerability is increased. The client is in a position to appropriate the subcontractor, demanding a new contract price slightly greater than £700 (the £500 salvage value if the assets are sold off and the £200 daily operating costs). He may justify this in the name of unexpected financial difficulties, which the subcontractor is generally not in a position to verify. Conversely, the subcontractor, realizing that the client faces stiff penalties for late delivery of the product to the final customer, may opportunistically use his bargaining power to push up the contract price, similarly claiming unforeseen costs. Verification may again be both difficult and expensive. — Diego Gambetta, Trust - Making and Breaking Cooperative…, 2540

Categorization

• XREF: Exact scenario microcosm of the reader’s Luhmann/Hardin analysis: parties can rationalize self-serving claims under cover of unverifiable ‘unexpected difficulties,’ collapsing the familiar/trust substrate. — connects to: Post-crisis risk models internalized social imitation as a financial risk factor. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1231