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Adverse selection, credit and efficiency: The case of the missing market

Martin, Alberto - Department of Economics and Business, Universitat … - 2008

We analyze a standard environment of adverse selection in credit markets. In our environment, entrepreneurs who are privately informed about the quality of their projects need to borrow from banks. Conventional wisdom says that, in this class of economies, the competitive equilibrium is...

Persistent link: https://www.econbiz.de/10004969343

Adverse selection, credit and efficiency: The case of the missing market

Martin, Alberto - Department of Economics and Business, Universitat … - 2010

We analyze a standard environment of adverse selection in credit markets. In our environment, entrepreneurs who are privately informed about the quality of their projects need to borrow in order to invest. Conventional wisdom says that, in this class of economies, the competitive equilibrium is...

Persistent link: https://www.econbiz.de/10008788752

A model of collateral, investment and adverse selection

Martin, Alberto - Department of Economics and Business, Universitat … - 2009

This paper characterizes the relationship between entrepreneurial wealth and aggregate investment under adverse selection. Its main finding is that such a relationship need not be monotonic. In particular, three results emerge from the analysis: (i) pooling equilibria, in which investment is...

Persistent link: https://www.econbiz.de/10005827444

Interbank comptetition with costly screening

Freixas, Xavier; Hurkens, Sjaak; Morrison, Alan D.; … - Department of Economics and Business, Universitat … - 2004

screening, a pure strategy equilibrium exists where banks optimally set interest rates at the same level as their competitors … banks have zero screening costs. In our set up we show that interest rate on loans are largely independent of marginal costs … analysis to the case where banks have differing screening abilities. …

Persistent link: https://www.econbiz.de/10005772155

Selling to consumers with endogenous types

Boone, Jan; Shapiro, Joel - Department of Economics and Business, Universitat … - 2006

For many goods (such as experience goods or addictive goods), consumers’ preferences may change over time. In this paper, we examine a monopolist’s optimal pricing schedule when current consumption can affect a consumer’s valuation in the future and valuations are unobservable. We assume...

Persistent link: https://www.econbiz.de/10005827488

Forward induction and the excess capacity puzzle: An experimental investigation

Brandts, Jordi; Cabrales, Antonio; Charness, Gary - Department of Economics and Business, Universitat … - 2003

While the theoretical industrial organization literature has long argued that excess capacity can be used to deter entry into markets, there is little empirical evidence that incumbent firms effectively behave in this way. Bagwell and Ramey (1996) propose a game with a specific sequence of moves...

Persistent link: https://www.econbiz.de/10005772278

Optimal second-degree price discrimination and arbitrage: On the role of asymetric information among buyers

Jeon, Doh Shin; Menicucci, Domenico - Department of Economics and Business, Universitat … - 2001

The traditional theory of monopolistic screening tackles individual self-selection but does not address the possibility …

Persistent link: https://www.econbiz.de/10005015548

Sequential screening

Courty, Pascal; Hao, Li - Department of Economics and Business, Universitat … - 1997

We present a model of price discrimination where a monopolist faces a consumer who is privately informed about the distribution of his valuation for an indivisible unit of good but has yet to learn privately the actual valuation. The monopolist sequentially screens the consumer with a menu of...

Persistent link: https://www.econbiz.de/10005772024

Dynamic adverse selection and debt

Chemla, Gilles; Grimaud, Antoine Faure - Department of Economics and Business, Universitat … - 1996

This paper argues that the strategic use of debt favours the revelation of information in dynamic adverse selection problems. Our argument is based on the idea that debt is a credible commitment to end long term relationships. Consequently, debt encourages a privately informed party to disclose...

Persistent link: https://www.econbiz.de/10005772121

Optimal contracts, adverse selection and social preferences: An experiment

Cabrales, Antonio; Charness, Gary - Department of Economics and Business, Universitat … - 2000

It has long been standard in agency theory to search for incentive-compatible mechanisms on the assumption that people care only about their own material wealth. However, this assumption is clearly refuted by numerous experiments, and we feel that it may be useful to consider nonpecuniary...

Persistent link: https://www.econbiz.de/10005772130

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