Wealth constraint effect based cooperation in venture business

Moral hazard and cooperation exist together in a venture business. For the interest of best distribution of the equilibrium output, This work, with a two-person general sum game, discusses the cooperation between venture entrepreneur and venture capitalist to reach a welfare optimization, under the wealth constraint of the venture entrepreneur. The result reveals that the wealth effect coefficient, λ , has an extensive effect upon the distribution of the output. Initial wealth plays a two-sided function towards Venture Entrepreneur´s equilibrium income decisions, while an increase of initial wealth weakens the wealth constraint effect, thus resulting in an exaltation of the share demanded by the entrepreneur in the total output.