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induced by efficient insurance contracts, i.e., those that are Pareto optimal for the insured and the insurer. One of our … contracts with deductibles are efficient. Characterization results of other risk measures, including the mean and distortion … risk measures, are also presented by linking them to different sets of contracts …
Persistent link: https://www.econbiz.de/10013210827
I develop a dynamic agency model of financial contracting, where borrowing constraints appear as part of the optimal contract. The novelty of the paper relative to previous work is that volatility is stochastic and exogenous to the agent behavior. A line of credit appears in the optimal long...
Persistent link: https://www.econbiz.de/10013060348
-compensation contracts. Using the introduction of exchanged-traded weather derivatives as a natural experiment, we find that executives who … firms' exposure to an important source of risk influences the design of their incentive-compensation contracts …
Persistent link: https://www.econbiz.de/10012854797
I show that stochastic contracts generate powerful incentives when agents suffer from probability distortion. When … implementing these contracts, the principal can target probability distortions in order to inflate the agent's perceived benefits … of exerting high levels of effort. This novel source of motivation is absent in contracts traditionally regarded as …
Persistent link: https://www.econbiz.de/10015053193
In a repeated unobserved endowment economy in which agents negotiate long-term contracts with a financial intermediary …
Persistent link: https://www.econbiz.de/10010499483
private acquisitions, I find that seller financing and earnouts become more common as information asymmetry increases between … decrease information asymmetry in firm acquisitions. Seller-financed acquisitions also close faster and at higher prices … which privately held firms mitigate adverse selection that arises from information asymmetry.* This paper was previously …
Persistent link: https://www.econbiz.de/10012856045
private acquisitions, I find that seller financing and earnouts become more common as information asymmetry increases between … decrease information asymmetry in firm acquisitions. Seller‐financed acquisitions also close faster and at higher prices … which privately held firms mitigate adverse selection that arises from information asymmetry …
Persistent link: https://www.econbiz.de/10013241013
In a hand-coded sample of M&A contracts from 2007-08, risk allocation provisions exhibit wide variation. Earn-outs are … allocation provisions. While asymmetric information and incentives are important, so are transaction and agency costs, implying …
Persistent link: https://www.econbiz.de/10013036593
these contracts. …
Persistent link: https://www.econbiz.de/10011855861
the addition of several new chapters on risk sharing, asymmetric information, adverse selection, signaling and moral … asymmetric information in contractual relationships. It is richly illustrated with 150 figures. It is suitable for both self …
Persistent link: https://www.econbiz.de/10012846042