On existence in equilibrium models with endogenous default

The equilibrium concept defined by Dubey et al. (DGS, 1990, 2000, 2005) generates equilibria such that asset buyers could raise expected returns by paying more for the assets that they purchase. A simple example shows that, in fact, all equilibria may be return-dominated in that sense. Universal existence in the DGS model thus depends critically on the assumption that lenders are unable to exploit an obvious profit opportunity.

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Year of publication:	2013
Authors:	Quintin, Erwan
Published in:	Journal of Mathematical Economics. - Elsevier, ISSN 0304-4068. - Vol. 49.2013, 5, p. 418-421
Publisher:	Elsevier
Subject:	Default \| General equilibrium \| Existence \| Credit rationing

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011065399