Study on Venture Capital Input and the Incentive Contract with Bilateral Moral Hazard

Abstract

Abstract: Based on the theory of modern contract and information economics, a linear incentive contract between venture capitalist and venture entrepreneur under bilateral moral hazard condition is designed. With this contract, the efforts and capital investment of both sides, and the output are analyzed with complete and incomplete information. By doing so, it presents how the sharing arrangement in the contract affects the incentive function for the input factors. A numerical example is given to verify the results obtained in this paper.

Key words: bilateral moral hazard, venture capital, incentive contract

Cai Yong-qing, Cao Guo-hua, Chen Yan-li. Study on Venture Capital Input and the Incentive Contract with Bilateral Moral Hazard[J]. Industrial Engineering Journal , 2011, 14(3): 87-91.

References

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