We propose a parsimonious model with adverse selection where delinquency, renegotiation, and bankruptcy all occur in … equilibrium as a result of a simple screening mechanism. A borrower has private information about her cost of bankruptcy, and a …, and thus become delinquent. The lender renegotiates with some delinquent borrowers. In the absence of renegotiation …

We ask whether the correlation between mortgage leverage and default is due to moral hazard (the causal effect of … leverage must weigh default-prevention against market distortions due to adverse selection …

-term loan, and those who do default less. Additional findings suggest borrowers self-select on private information about their …

who do default less. Additional findings suggest borrowers self-select on private information about their future ability …

. That selection works against banks; large overdrafts cost more to supply and, if depositors default, banks lose more, so …

. That selection works against banks; large overdrafts cost more to supply and, if depositors default, banks lose more, so …

colleagues get more income net of production costs. Screening workers with equal productivity but different fairness concerns is …

fail to repay. In this paper we asked whether, and to what extent, it may be beneficial to apply a screening mechanism to … purpose, we develop a two-sector infinite horizon model featuring oligopolistic small businesses and a screening contract in …-allocation government sets a harsh default sanction to deter entrepreneurs with bad projects from reentering and improves aggregate …