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Optimal Student Loans and Graduate Tax under Moral Hazard and Adverse Selection
Gary-Bobo, Robert J.; Trannoy, Alain - CESifo - 2013
We completely characterize the set of second-best optimal “menus”of student-loan contracts in a simple economy with risky labour-market outcomes, adverse selection, moral hazard and risk aversion. The model combines structured student loans and an elementary optimal income-tax problem à la...
Persistent link: https://www.econbiz.de/10010668475
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Illiquidity and Under-Valuation of Firms
Gale, Douglas; Gottardi, Piero - CESifo - 2009
We study a competitive model in which market incompleteness implies that debt-financed firms may default in some states … of nature and default may lead to the sale of the firms’ assets at fire sale prices when markets are illiquid. This … incompleteness is the only friction in the model and the only cost of default. The anticipation of such losses alone may distort …
Persistent link: https://www.econbiz.de/10008572580
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Optimal Taxation and Constrained Inefficiency in an Infinite-Horizon Economy with Incomplete Markets
Gottardi, Piero; Kajii, Atsushi; Nakajima, Tomoyuki - CESifo - 2011
We study the dynamic Ramsey problem of finding optimal public debt and linear taxes on capital and labor income within a tractable infinite horizon model with incomplete markets. With zero public expenditure and debt, it is optimal to tax the risky labor income and subsidize capital, while a...
Persistent link: https://www.econbiz.de/10009293486
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Economic Growth and Longevity Risk with Adverse Selection
Heijdra, Ben J.; Reijnders, Laurie S. M. - CESifo - 2009
We study a closed economy featuring heterogeneous agents and exhibiting endogenous economic growth due to interfirm external effects. Individual agents differ in terms of their mortality profile. At birth, nature assigns a health status to each agent. Health type is private information and...
Persistent link: https://www.econbiz.de/10008583659
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Imperfect Financial Markets as a Commitment Device for the Government
Simon, Jenny - CESifo - 2014
able to fulfill their financial liabilities. The impending individual “default losses” add up to an effective commitment …
Persistent link: https://www.econbiz.de/10010877738
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Market Transparency, Adverse Selection, and Moral Hazard
Klein, Tobias J.; Lambertz, Christian; Stahl, Konrad O. - CESifo - 2013
We study the effects of improvements in market transparency on eBay on seller exit and continuing sellers’ behavior. An improvement in market transparency by reducing strategic bias in buyer ratings led to a significant increase in buyer valuation especially of sellers rated poorly prior to...
Persistent link: https://www.econbiz.de/10010877941
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How to Share it out: The Value of Information in Teams
Gershkov, Alex; Li, Jianpei; Schweinzer, Paul - CESifo - 2014
We study the role of information exchange, leadership and coordination in team or partnership structures. For this purpose, we view individuals jointly engaging in productive processes—a ‘team’—as endowed with individual and privately held information on the joint production process....
Persistent link: https://www.econbiz.de/10010812489
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Should UI Benefits Really Fall over Time?
Hassler, John; Mora, José V. Rodriguez - CESifo - 2002
The issue of whether unemployment benefits should increase or decrease over the unemployment spell is analyzed in an analytically tractable model allowing moral hazard, adverse selection and hidden savings. Analytical results show that when the search productivity of unemployed is constant over...
Persistent link: https://www.econbiz.de/10005406174
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An Experimental Investigation of Risk Sharing and Adverse Selection
Tausch, Franziska; Potters, Jan; Riedl, Arno - CESifo - 2013
Does adverse selection hamper the effectiveness of voluntary risk sharing? How do differences in risk profiles affect adverse selection? We experimentally investigate individuals’ willingness to share risks with others. Across treatments we vary how risk profiles differ between individuals. We...
Persistent link: https://www.econbiz.de/10010639422
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Optimal Wage Redistribution in the Presence of Adverse Selection in the Labor Market
Bastani, Spencer; Blumkin, Tomer; Micheletto, Luca - CESifo - 2014
In this paper we allude to a novel role played by the non-linear income tax system in the presence of adverse selection in the labor market due to asymmetric information between workers and firms. We show that an appropriate choice of the tax schedule enables the government to affect the wage...
Persistent link: https://www.econbiz.de/10010888445