We characterize the competitive equilibrium on the credit market when borrowers can strategically default. We assume that the audit is subject of errors of the two types and that lenders cannot commit ex-ante. We determine the penalty, the loan rate, the audit and strategic default...

This paper presents a theory for Islamic venture capital namely ‘Mudharabah’ contract under adverse selection problem. In order to avoid selecting a low type entrepreneur for a given good project, the framework defines the profit sharing ratio (PSR) as a screening device. We then develop a...

This paper presents a theory for Islamic venture capital namely ‘Mudharabah’ contract under adverse selection problem. In order to avoid selecting a low type entrepreneur for a given good project, the framework defines the profit sharing ratio (PSR) as a screening device. We then develop a...

This paper investigates the impact of health risk on insurance contract with hazard moral. We use a bi-dimensional utility function (wealth and health status). We prove that the type of health risk influences the equilibrium of insurance market. A full coverage is possible with moral hazard....

We consider two-sided matching markets in which agents have private information on a state of nature which determines the agents' utilities of matching. Monetary transfers are allowed and utility functions are quasi-linear. The model thus extends the assignment game introduced by Shapley and...

We survey selected results on strategic information transmission. We distinguish between "cheap talk" and "persuasion". In the latter model, the informed player's message set depends on his type. As a benchmark, we first assume that the informed player sends a single message to the decision...