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Kovrijnykh, Natalia - In: American Economic Review 103 (2013) 7, pp. 2848-74

This paper analyzes a dynamic lending relationship where the borrower cannot be forced to make repayments, and the lender offers long-term contracts that are imperfectly enforced and repeatedly renegotiated. No commitment and full commitment by the lender are special cases of this model where...

Persistent link: https://www.econbiz.de/10010720108

Liquidity Constraints and Imperfect Information in Subprime Lending

Adams, William; Einav, Liran; Levin, Jonathan - In: American Economic Review 99 (2009) 1, pp. 49-84

down-payment requirements. Lenders also face substantial informational problems. Default rates rise significantly with loan …

Persistent link: https://www.econbiz.de/10004999864

The Great Recession: Lessons from Microeconomic Data

Mian, Atif; Sufi, Amir - In: American Economic Review 100 (2010) 2, pp. 51-56

Persistent link: https://www.econbiz.de/10008584461

Consumer Confusion in the Mortgage Market: Evidence of Less Than a Perfectly Transparent and Competitive Market

Woodward, Susan E.; Hall, Robert E. - In: American Economic Review 100 (2010) 2, pp. 511-15

Persistent link: https://www.econbiz.de/10008584521

Behavioral Constraints on the Design of Subgame-Perfect Implementation Mechanisms

Fehr, Ernst; Powell, Michael; Wilkening, Tom - In: American Economic Review 111 (2021) 4, pp. 1055-1091

We study subgame-perfect implementation (SPI) mechanisms that have been proposed as a solution to incomplete contracting problems. We show that these mechanisms, which are based on off-equilibrium arbitration clauses that impose large fines for lying and the inappropriate use of arbitration,...

Persistent link: https://www.econbiz.de/10013502140

All-or-Nothing Monitoring

Zhao, Rui R. - In: American Economic Review 98 (2008) 4, pp. 1619-28

A principal can observe both the output and input of an agent who works at a job involving multiple tasks. We provide a simple theory that explains why it may be optimal for the principal to use only an output-based incentive contract, even though the principal can monitor the agent's actions...

Persistent link: https://www.econbiz.de/10005237698

Endogenous Verifiability and Relational Contracting

Kvaløy, Ola; Olsen, Trond E. - In: American Economic Review 99 (2009) 5, pp. 2193-2208

Principal-agent models usually invoke the strong assumption that the parties know for sure ex ante whether a variable is verifiable or not. This paper assumes that only the probability of verification is known, and that this probability is endogenously determined. We analyze a principal-agent...

Persistent link: https://www.econbiz.de/10008596330

The Cost of Contract Renegotiation: Evidence from the Local Public Sector

Gagnepain, Philippe; Ivaldi, Marc; Martimort, David - In: American Economic Review 103 (2013) 6, pp. 2352-83

Contract theory claims that renegotiation prevents attainment of the efficient solution that could be obtained under … full commitment. Assessing the cost of renegotiation remains an open issue from an empirical viewpoint. We fit a structural … principal-agent model with renegotiation on a set of contracts for urban transport services. The model captures two important …

Persistent link: https://www.econbiz.de/10010815474

Bidding for Incomplete Contracts: An Empirical Analysis of Adaptation Costs

Bajari, Patrick; Houghton, Stephanie; Tadelis, Steven - In: American Economic Review 104 (2014) 4, pp. 1288-1319

paving contracts we show that renegotiation imposes significant adaptation costs. Reduced form regressions suggest that …

Persistent link: https://www.econbiz.de/10010815559

Cognition and Incomplete Contracts

Tirole, Jean - In: American Economic Review 99 (2009) 1, pp. 265-94

Thinking about contingencies, designing covenants, and seeing through their implications is costly. Parties to a contract accordingly use heuristics and leave it incomplete. The paper develops a model of limited cognition and examines its consequences for contractual design. (JEL D23, D82, D86, L22)

Persistent link: https://www.econbiz.de/10004999833

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