I study the role of the negotiation protocol in two-issues bargaining between two players, in which the pie only exists if both players contribute to its creation. The issues are the fraction of the pie, and the second is the pie itself, modeled as which project to choose. I examine three protocols–simultaneous, sequential, and incomplete bargaining–and show that the protocol does not play any role if the contribution cost of one player is high enough. I provide conditions under which the protocol plays a role and describe the equilibrium. I apply the model to discuss the allocation of control rights in early projects financed by venture capital.
[This paper contains most of the results of an older paper called Venture Capital Contracts under Disagreement.]
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.