-equations model that specifies the probability of a bailout and banks' risk taking.We identify the effect of expected bailout …-2006. The marginal effect of risk with respect to bailout expectations is 7.2 basis points. A change of bailout expectations by …

Incomplete information is a commitment device for time consistency problems. In the context of time consistent labor …

research has hypothesized that these cutoff rules result from a securitization rule of thumb. Under this theory, an observed … model that rationalizes such an origination rule of thumb. Under this alternative theory, jumps in default are not evidence … securitization rule-of-thumb theory but consistent with the origination rule-of-thumb theory. There are jumps in the number of loans …

sometimes make the commitment problem disappear entirely. In particular, we analyze a model with moral hazard and two-sided lack … of commitment. After agents have chosen a hidden effort and the need to provide incentives has vanished, firms can modify … properties. In addition, we show that equilibrium contracts without commitment are identical to those with full commitment if the …

of financial intermediation with limited commitment. When a crisis occurs, the policy maker will respond by using public … resources to augment the private consumption of those investors facing losses. The anticipation of such a "bailout" distorts ex … fragility. Prohibiting bailouts is not necessarily desirable, however: while it induces intermediaries to become more liquid, it …