Perfect Bayesian Equilibria of Bargaining with Speedy Disbursement

Abstract

This paper presents models of various bargaining games with incomplete information. In particular, in infinitely repeated games pertaining to venture capital (VC) negotiations with startups and their resultant perfect Bayesian equilibria (PBE) states are used to establish parameters under which inefficiencies not yet explored in the literature persist in the VC space. The novel concept of "speedy disbursement", combined with game features allowing the option to abandon negotiations at outside risk, provides a parameter under which the PBE of these games can be seen to shift to outcomes with greater social e ciency and faster time-to-market for risky, but potentially revolutionary new technologies. Keywords: Perfect Bayesian equilibrium, bargaining, infinitely repeated game, incomplete information, startup, venture capital, speedy disbursement