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Optimal Interventions in Markets with Adverse Selection

PHILIPPON, Thomas; Skreta, Vasiliki - National Bureau of Economic Research (NBER) - 2010

We characterize cost-minimizing interventions to restore lending and investment when markets fail due to adverse selection. We solve a mechanism design problem where the strategic decision to participate in a government's program signals information that affects the financing terms of...

Persistent link: https://www.econbiz.de/10008624585

Corruption, Intimidation, and Whistle-blowing: a Theory of Inference from Unverifiable Reports

Chassang, Sylvain; Miquel, Gerard Padró i - National Bureau of Economic Research (NBER) - 2014

We consider a game between a principal, an agent, and a monitor in which the principal would like to rely on messages by the monitor to target intervention against a misbehaving agent. The difficulty is that the agent can credibly threaten to retaliate against likely whistleblowers in the event...

Persistent link: https://www.econbiz.de/10010969268

A Game Theoretic Foundation of Competitive Equilibria with Adverse Selection

Netzer, Nick; Scheuer, Florian - National Bureau of Economic Research (NBER) - 2012

We construct a fully specified extensive form game that captures competitive markets with adverse selection. In particular, it allows firms to offer any finite set of contracts, so that cross-subsidization is not ruled out. Moreover, firms can withdraw from the market after initial contract...

Persistent link: https://www.econbiz.de/10010885305

A Theory of the Firm based on Partner Displacement

Hellmann, Thomas; Thiele, Veikko - National Bureau of Economic Research (NBER) - 2012

We develop a new theory of the firm where asset owners sometimes want to change partners ex-post. The model identifies a fundamental trade-off between (i) a "displacement externality" under non-integration, where a partner leaves a relationship even though the benefit is worth less than the loss...

Persistent link: https://www.econbiz.de/10010950631

Social Insurance, Information Revelation, and Lack of Commitment

Golosov, Mikhail; Iovino, Luigi - National Bureau of Economic Research (NBER) - 2014

We study the optimal provision of insurance against unobservable idiosyncratic shocks in a setting in which a benevolent government cannot commit. A continuum of agents and the government play an infinitely repeated game. Actions of the government are constrained only by the threat of reverting...

Persistent link: https://www.econbiz.de/10010951169

Real Options in a Dynamic Agency Model, with Applications to Financial Development, IPOs, and Business Risk

PHILIPPON, Thomas; Sannikov, Yuliy - National Bureau of Economic Research (NBER) - 2007

We study investment options in a dynamic agency model. Moral hazard creates an option to wait and agency conflicts affect the timing of investment. The model sheds light, theoretically and quantitatively, on the evolution of firms' dynamics, in particular the decline of the failure rate and the...

Persistent link: https://www.econbiz.de/10005710340

Who Should Pay for Credit Ratings and How?

Kashyap, Anil; Kovrijnykh, Natalia - National Bureau of Economic Research (NBER) - 2013

competition among CRAs causes them to reduce their fees, put in less effort, and thus leads to less accurate ratings. Rating …

Persistent link: https://www.econbiz.de/10010796643

Inducing Leaders to Take Risky Decisions: Dismissal, Tenure, and Term Limits

Jackson, Matthew O.; Aghion, Philippe - National Bureau of Economic Research (NBER) - 2014

In this paper we analyze the problem of whether and/or when to replace a leader (agent) when no monetary rewards are available, and it is the leader's competence rather than effort that is being evaluated. The only decisions that the leader takes over time are whether to undertake risky but...

Persistent link: https://www.econbiz.de/10010796728

Reducing Moral Hazard in Employment Relationships: Experimental Evidence on Managerial Control and Performance Pay

Jackson, C. Kirabo; Schneider, Henry S. - National Bureau of Economic Research (NBER) - 2013

Moral hazard is endemic to employment relationships and firms often use performance pay and managerial control to address this problem. While performance pay has received much empirical attention, managerial control has not. We analyze data from a managerial-control field experiment in which an...

Persistent link: https://www.econbiz.de/10010711815

Bonus Culture: Competitive Pay, Screening, and Multitasking

Benabou, Roland; Tirole, Jean - National Bureau of Economic Research (NBER) - 2013

This paper analyzes the impact of labor market competition and skill-biased technical change on the structure of … compensation. The model combines multitasking and screening, embedded into a Hotelling-like framework. Competition for the most … perfect competition, the resulting efficiency loss can be larger than that imposed by a single firm or principal, who distorts …

Persistent link: https://www.econbiz.de/10010821716

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