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Persistent link: https://www.econbiz.de/10011399153
This analysis introduces a theoretical framework for assessing the empirical discussion of asymmetric information amongst mortgage lenders and adds the idea of lender competition into this framework. Despite this addition, the results are generally consistent with existing empirical findings...
Persistent link: https://www.econbiz.de/10013027213
We study a duopoly where the two price setting firms have symmetric information. The firms produce substitute goods with a state dependent common value. The information that is available to both firms about the unknown state of nature is also available to the consumers, who also have access to...
Persistent link: https://www.econbiz.de/10012985046
Bank runs may serve to communicate information across agents, and thus enhance rather than thwart allocation efficiency by making the fundamentals determine the asset prices. Figuratively speaking, banks die (go bankrupt) singing a swan song (revealing hidden information). In this way bank runs...
Persistent link: https://www.econbiz.de/10012916727
Asymmetric information is a classic example of market failure that undermines the efficiency associated with perfectly competitive market outcomes: the “lemons” market. Credible certification, that substantiates unobservable characteristics of products that consumers value, is often...
Persistent link: https://www.econbiz.de/10012891082
Policy makers often decide to liberalize foreign bank entry but at the same time restrict the mode of entry. We study how different entry modes affect the interest rate for loans in a model in which domestic banks possess private information about their incumbent clients but foreign banks have...
Persistent link: https://www.econbiz.de/10010365898
Asymmetric information is a classic example of market failure that undermines the efficiency associated with perfectly competitive market outcomes: the "lemons" market. Credible certification, that substantiates unobservable characteristics of products that consumers value, is often considered a...
Persistent link: https://www.econbiz.de/10011987160
We study the implications of overconfidence for price setting in a monopolistic competition setup with incomplete information. Our price-setters overestimate their abilities to infer aggregate shocks from private signals. The fraction of uninformed firms is endogenous; firms can obtain...
Persistent link: https://www.econbiz.de/10011771595
Initial applications of prediction markets (PMs) indicate they provide good forecasting instruments in many settings, such as elections, the box office, or product sales. One particular characteristic of these “first-generation” (G1) PMs is that they link the payoff value of a stock's share...
Persistent link: https://www.econbiz.de/10013070966
In markets where duopolists supply differentiated products with certain degree of complementarity, not only can each consumer choose to buy one unit from a particular seller (single-purchase), the consumer may also choose to buy from different sellers simultaneously (multi-purchase) for brand...
Persistent link: https://www.econbiz.de/10013307580