Research on the selection of the venture capitalist based on the signaling

This paper Studies the problem of venture capitalist selection within the principal-agent framework. In the asymmetric information, there exists serious adverse selection between the investor and the venture capitalist. In order to eliminate this adverse selection, the investor can take some signals to identify high-quality venture capitalist. Based on the Game theory, this paper firstly analyses the reasons and results of adverse selection between the investor and the venture capitalist, then introducing the efficiency cost as a signal, the paper studies the separate equilibrium of the venture capitalists of various abilities and discusses the condition of Bayesian Nash Equilibrium in signaling game. Finally some specific forms taken as the signal of venture capitalist's efficiency cost are given.