Business-Economics-Management Seminar

14/01/2014 - 13:00

 

Speaker:

Prof. Avraham (Avri) Ravid

Sy Syms Professor of Finance
Chair, Finance Department
Sy Syms School of Business

 

Title:

Intellectual Property Contracts: Theory and Evidence from Screenplay Sales
by Milton Harris,  S. Abraham Ravid,  Ronald Sverdlove,  and Suman Basuroy

 

Abstract:

This paper presents a model of intellectual property contracts. We explain why many intellectual property contracts are contingent on eventual production or success, even without moral hazard on the part of risk-averse sellers. The explanation is based on differences of opinion between buyers and sellers, and reputation building through multiple transactions.  Our model predicts that more reputable sellers will be offered a very different mix of cash and contingency payments than inexperienced sellers. We also discuss the probability of sales as a function of seller and product characteristics.  The theoretical model is tested on a data base of screenplay contracts.