What determines securitization levels, and should they be regulated? To address these questions we develop a model where originators can exert unobservable effort to increase expected asset quality, subsequently having private information regarding quality when selling ABS to rational investors....

This article shows how management consultant’s daily transgression practices favour semi-confidential information diffusion, which has the effect of improving managers’ strategic decision making. By their marginal transgressions (namely confidentiality rule breaking), consultants act as...

The paper surveys the main meeting points between economics and psychology. It shows that their meeting is closely connected to a re-examinations of the decision-making theory, for individual, as well as for, game situations. After recalling the key role of the emotions in decision-making, it...

The paper draws lessons from the experience of the past year for the conduct of central banks in the pursuit of macroeconomic and financial stability. Macroeconomic stability is defined as either price stability or as price stability and sustainable output or employment growth. Financial...

Corporate finance theories suggest that problems of asymmetric information and moral hazard in credit markets can be addressed by choosing short-term maturities. Theories of debt renegotiation suggest that the credibility of the implicit commitment to not make concessions to insolvent borrowers,...

This paper examines the choice of tools for managing a firm’s operational risks: cash reserves, insurance contracts, and financial assets under an optimal financing contract that solves moral hazard between insiders and outside investors. Risk management is valuable as it reduces the costs of...

We analyze the degree of contract completeness with respect to staging of venture capital investments using a hand-collected German data set of contract data from 464 rounds into 290 entrepreneurial firms. We distinguish three forms of staging (pure milestone financing, pure round financing and...

Two agents sequentially contracts with different principals under moral hazard. If agents care for one another, the second principal gains by insuring them over first wages. Even with independent tasks, the first principal must offer riskier payments to induce effort.

This paper provides a method to prove existence of solutions to some moral hazard problems with infinite set of outcomes. The argument is based on the concept of nondecreasing rearrangement and on a supermodular version of Hardy–Littlewood’s inequality. The method also provides qualitative...

We develop a "welfarist" model in which the collective demand for health insurance is mainly explained by a solvability motive : health insurance does not have for principal function to treat the risk aversion of solvent agents but to make it possible to individuals who are too poor to assume...