and optimistic behavior in good times. In a disaster, uncertainty about duration acts as an amplification mechanism … welfare cost of parameter uncertainty can be extreme. However, in advance of a disaster, uncertainty about the arrival rate … can be welfare-increasing and agents exhibit diminished preparedness: they optimally invest less in mitigation than under …

and optimistic behavior in good times. In a disaster, uncertainty about duration acts as an amplification mechanism … welfare cost of parameter uncertainty can be extreme. However, in advance of a disaster, uncertainty about the arrival rate … can be welfare-increasing and agents exhibit diminished preparedness: they optimally invest less in mitigation than under …

capitalized. We employ a set of headline facts about the build-up of such risk exposures to explain how and why LCFIs adopted this … in decades preceding the current one, allowing LCFIs to take on excessive systemic risk. We also examine alternative … explanations for the financial crisis. We conclude that while moral hazard problems in the originate-and-distribute model of …

We present a simple model of systemic risk and show how each financial institution’s contribution to systemic risk can … empirically the ability of components of SES to predict emerging systemic risk during the nancial crisis of 2007-2009. …