To the lender, the latter can screen borrowers by their combined choice of loan-to-value (LTV) ratio and interest rate. It further demonstrates that when borrowers signal their default risk by acquiring a credit score, then a combined separating signaling and screening equilibrium is attained....

When there is asymmetric information regarding the quality of a traded durable asset, the informed seller might signal asset quality to prospective uninformed buyers by investing in improvements and maintenance. In contrast to Spence (1973), however, this signal may be productive. We derive...

The signaling model of Spence (1973a) and the screening model of Rothchild-Stiglitz (1976) have been separately used to explain economic phenomena when there is asymmetric information. In the real world, however, situations of asymmetric information often simultaneously involve signaling and...

In this paper, we combine direct arbitrage arguments and an option-pricing approach to develop a method of pricing the option for rent control. For a lump-sum payment of key money, a tenant acquires the right to rent a real estate unit for an exogenously determined controlled rent, as opposed to...

This study developed a unified framework for theoretically analyzing a set of mortgage attributes that screens borrower types according to their unobservable default risk. In the presence of asymmetric information, a self-selection process is attained, where lower default risk type borrowers...

We propose a simple axiomatic system that any depreciation and amortization method - complying with the recent developments in the guidelines set by GAAP and IASB - must obey. The system is consistent with both the matching and the impairment principles. We show that none of the prevalent...

The signaling model of Spence (1973a) and the screening model of Rothchild-Stiglitz (1976) have been separately used to explain economic phenomena when there is asymmetric information. In the real world, however, situations of asymmetric information often simultaneously involve signaling and...

Empirical evidence shows that the value of units in a building generally rises with their floor level due to features such as the better view and lesser noise experienced in higher stories. We adopt a theoretical approach for examining the value of units in different floors based on the...

We propose a partial ordering of quot;unpredictable mobilityquot; based on Blackwell's ordering of Markov (information) matrices. This partial ordering ranks mobility matrices according to the degree to which elements in a given set are likely to transit from one state to another, independently...

Consistent with existing literature, we first show that when borrowers' default probability on the mortgage loan is unobservable to the lender, the latter can screen borrowers by their combined choice of loan-to-value (LTV) ratio and interest rate. We further demonstrate that when borrowers also...