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Shotgun mechanisms for common-value partnerships: The unassigned-offeror problem

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  • Landeo, Claudia M.
  • Spier, Kathryn E.

Abstract

Shotgun clauses are commonly included in the business agreements of partnerships and limited liability companies (LLCs), but the role of offeror typically remains unassigned. In a common-value, one-sided asymmetric information setting, unequal and inefficient outcomes occur with an unassigned offeror. Experimental results are aligned with our theory.

Suggested Citation

  • Landeo, Claudia M. & Spier, Kathryn E., 2013. "Shotgun mechanisms for common-value partnerships: The unassigned-offeror problem," Economics Letters, Elsevier, vol. 121(3), pages 390-394.
    • Handle: RePEc:eee:ecolet:v:121:y:2013:i:3:p:390-394
    DOI: 10.1016/j.econlet.2013.09.016
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    References listed on IDEAS

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    1. Vincent P. Crawford, 1977. "A Game of Fair Division," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 44(2), pages 235-247.
    2. María‐Angeles de Frutos & Thomas Kittsteiner, 2008. "Efficient partnership dissolution under buy‐sell clauses," RAND Journal of Economics, RAND Corporation, vol. 39(1), pages 184-198, March.
    3. Che, Yeon-Koo & Hendershott, Terrence, 2008. "How to divide the possession of a football?," Economics Letters, Elsevier, vol. 99(3), pages 561-565, June.
    4. Richard R. W. Brooks & Claudia M. Landeo & Kathryn E. Spier, 2010. "Trigger happy or gun shy? Dissolving common‐value partnerships with Texas shootouts," RAND Journal of Economics, RAND Corporation, vol. 41(4), pages 649-673, December.
    5. Landeo, Claudia & Spier, Kathryn, 2013. "Shotguns and Deadlocks," Working Papers 2013-5, University of Alberta, Department of Economics.
    6. Landeo, Claudia & Spier, Kathryn, 2013. "Irreconcilable Differences: Judicial Resolution of Business Deadlock," Working Papers 2013-9, University of Alberta, Department of Economics.
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    Cited by:

    1. Oechssler, Jörg & Roomets, Alex, 2023. "Dissolving an ambiguous partnership," Working Papers 0733, University of Heidelberg, Department of Economics.
    2. Brown, Alexander L. & Van Essen, Matt, 2022. "Breaking-up should not be hard to do! Designing contracts to avoid wars of attrition," European Economic Review, Elsevier, vol. 143(C).
    3. Gerrit Bauch & Frank Riedel, 2022. "The Texas Shootout under Uncertainty," Papers 2211.10089, arXiv.org.

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    More about this item

    Keywords

    Business deadlock; Shotgun mechanisms; Asymmetric information; Experiments;
    All these keywords.

    JEL classification:

    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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