Research On Moral Risk Game Model In Venture Capital Under Overconfidence

The principal-agent problem mainly displays by the information asymmetry between the risk actors,venture capitalists(VC)and risk entrepreneurs(EN)in venture capital.The problem of moral hazard mainly reflects by the information asymmetry between VC and EN.They are the main operators of venture capital,which decide the success or failure of investment.The question is also the focus of economic field.Therefore,in order to avoid moral hazard,the principal-agent model provides a method of designing incentive contracts based on completely rational conditions.In addition,psychological research shows that people are overconfident about their ability and judgment of the future.Because overconfidence affects the ability of agents and the distribution of uncertain outputs conditional on the agent's behavior,the psychological characteristic is very important in the agency problem,especially in venture capital,which is a high-risk,high-yield investment.People often are influenced by the psychological bias of overconfidence.From the perspective of “limited rational person”,this article quantitatively analyzes the supervisory mechanism of the principal,and applies fuzzy mathematics knowledge,constructs the membership function,and analyzes the overconfidence qualitatively.According to establish single-layer compensation contract model and double-layer compensation contract model between the three parties,the paper draw the following conclusions:(1)In the single-layer compensation contract,internal supervision mechanism of VC and external supervision mechanism of the risk investors can improve the optimal effort level of VC and EN,reducing the information asymmetry and increasing investment income of the three.In addition,the overconfidence of VC and EN can improve their optimal effort level and reward sharing coefficient,and the overconfidence can also reduce the agency cost of investment.(2)In the double-layer compensation contract,the greater the degree of VC's overconfidence is,the higher the optimal effort level becomes,and the higher the reward sharing coefficient is.The greater the degree of EN's overconfidence is,the higher the optimal effort level becomes,and the higher the reward sharing coefficient is.Under certain conditions,the overconfidence membership of VC and EN can make the total agency cost in the venture capital reach the least.Compared with previous researches,the conclusion of this paper conforms to actual operation process of venture capital,which provides a new perspective for measuring overconfidence and avoiding moral hazard in investment.Finally,the conclusion of the model is verified by an example.