Shotgun Mechanisms for Common-Value Partnerships: The Unassigned-Offeror Problem

Abstract

Shotguns 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.