Working Papers:

Venture Capital Contracts under Disagreement (new version coming soon)

I study the allocation of control rights in venture alliances between an entrepreneur and a venture capitalist when there is disagreement about future non contractible decisions. Control rights are valuable because both parties want to make the decisions when there is disagreement. I analyze how that allocation depends on which party has the bargaining power when they negotiate. The party with the bargaining power offers a contract to the other party that specifies control and cash-flow rights in exchange for investment by the venture capitalist. I show that when the entrepreneur has the bargaining power, he voluntarily relinquishes control rights when the required investment is above a threshold; in general, more disagreement renders him less likely to retain the control rights. Control and cash-flow rights are substitutes, because the entrepreneur relinquishes control rights to get more cash-flow rights. If the venture capitalist has the bargaining power she always retains the control rights, but it might be the case that the entrepreneur has the real authority (i.e., the effective control over decisions).

Bargaining over an Endogenous Surplus (new version coming soon)

I study a bargaining model between two players with endogenous probability of recognition and surplus. At each period they can make two types of effort: productive effort, that increases the surplus, and unproductive effort, which affects the probability of being recognized as the proposer. With convex effort cost players increase the surplus for some periods before ending the game. I characterize how the advantages of each player affect the effort decisions over time. I show that advantages in the unproductive effort affect the provision of both types of effort, but advantages in the productive effort only affect the effort decision regarding the productive effort. Different time preferences only affect productive efforts if the probability of recognition is not persistent, and both types of effort if it is.

Work in Progress:

Delegation and Learning           

Knowledge Transfer among Agents