however, the firm is a "sitting duck" for the union. The capital stock cannot be shifted easily so the union can renege on its promise of moderate wages and skim off a large part of the firm's profits. But the firm knows beforehand that the union has this incentive to cheat, and consequently will not believe the union's announcement of smooth and moderate wages. As a result, it invests less, in order to minimize the risk and impact of being cheated in the future. This is the famous underinvestment result, discussed for example in van der Ploeg (1987b). We shall return to credibility issues in Chapter 10, where we shall also illustrate how reputational forces can overcome (some of) the problems associated with dynamically inconsistent behaviour.