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The paper investigates optimal financial contracts when investment in pledgeable assets is endogenous and not observable to financiers. In a setting with uncertainty, two inputs with different collateral value and investment unobservability, we show that a firm-bank secured credit contract is...
Persistent link: https://www.econbiz.de/10010800991
This paper studies if external commitment devices are effectively capable of helping agents to reduce their consumption … ambiguous effects on individuals' welfare. First, hyperbolic agents purchase commitment devices less often that they wish to … mild level of addiction, commitment devices effectively reduce consumption and improve health status. However, for severe …
Persistent link: https://www.econbiz.de/10008765692
rigid legal systems are preferable at early stages of technological development, when commitment problems are more severe …
Persistent link: https://www.econbiz.de/10008557295