Calling the Price or Making the Call? Role Preferences in Texas Shootout Clauses

Gerrit Bauch and Lars Müller
Additional contact information
Gerrit Bauch: Center for Mathematical Economics, Bielefeld University
Lars Müller: Center for Mathematical Economics, Bielefeld University

No 760, Center for Mathematical Economics Working Papers from Center for Mathematical Economics, Bielefeld University

Abstract: We analyze Texas Shootout clauses within an independent private values framework and characterize shareholders’ preferences over proposer and chooser roles. While the mechanism can generate efficiency gains relative to the status quo, asymmetries in role payoffs may deter shareholders from initiating dissolution. Using an ex-post perspective and allowing for risk aversion, unequal ownership shares, and heterogeneous valuation distributions, we establish conditions under which shareholders prefer being the chooser. We contribute to understanding why Texas Shootout clauses are rarely invoked in practice despite their ubiquity in partnership contracts and clarify when and why Texas Shootout clauses fail to function as intended

Keywords: Texas Shootout; Role Preferences; Partnership Dissolution (search for similar items in EconPapers)
Pages: 24
Date: 2026-01-28
References: Add references at CitEc
Citations:

Downloads: (external link)
https://pub.uni-bielefeld.de/download/3013519/3013520 First Version, 2026 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bie:wpaper:760

Access Statistics for this paper

More papers in Center for Mathematical Economics Working Papers from Center for Mathematical Economics, Bielefeld University Contact information at EDIRC.
Bibliographic data for series maintained by Bettina Weingarten ().