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This paper studies the implications of agents signaling their moral type in a lying game. In the theoretical analysis, a signaling motive emerges where agents dislike being suspected of lying and where some types of liars are more stigmatized than others. The equilibrium prediction of the model...
Persistent link: https://www.econbiz.de/10012500269
Empirical evidence suggests that banks often engage in refinancing of intrinsically insolvent debtors instead of writing of their non-performing loans. Such forbearance lending may induce soft budget constraints for the debtors, as it diminishes their incentives to thwart default. This paper...
Persistent link: https://www.econbiz.de/10010301816
We provide a real-options model of an industry in which agents time abandonment of their projects in an effort to protect their reputations. Agents delay abandonment attempting to signal their quality. When a public common shock forces abandonment of a small fraction of projects irrespective of...
Persistent link: https://www.econbiz.de/10009520060
This paper examines the phenomenon of management-initiated, court-supervised reorganization of companies in U.S. bankruptcy court. The proposed in-court persuasion mechanism reconciles excessive reorganizations of non-viable companies (and subsequent repeat failures) with management-initiated...
Persistent link: https://www.econbiz.de/10011779720
We analyze the effect of a bankruptcy law according to which some of the borrower's assets are exempt from liquidation in the event of default in the context of a competitive credit market characterized either by moral hazard (MH) or by adverse selection (AS). In particular, we study how the...
Persistent link: https://www.econbiz.de/10012862259
A liquidity-constrained asset owner designs an asset-backed security to raise funds from an informed liquidity supplier. Information insensitive securities reduce the liquidity supplier's informational rents. The issuer optimally screens the liquidity supplier's private information by offering a...
Persistent link: https://www.econbiz.de/10014255105
Empirical evidence suggests that banks often engage in refinancing of intrinsically insolvent debtors instead of writing of their non-performing loans. Such forbearance lending may induce soft budget constraints for the debtors, as it diminishes their incentives to thwart default. This paper...
Persistent link: https://www.econbiz.de/10003636668
Two firms produce a good with a horizontal and a vertical characteristic called quality. The difference in the unobservable quality levels determines how the firms share the market. We consider two scenarios: in the first one, firms disclose quality; in the second one, they send costly signals...
Persistent link: https://www.econbiz.de/10009386559
Persistent link: https://www.econbiz.de/10012260874
: task effort, honesty, and reciprocity. A second study examined the behavioral impact of two weak signals: regular … Light types were more likely to cheat and shirk in the honesty task, put forth less task effort (i.e., were less productive … in the honesty task. Additionally, ex-Prisoners were more likely to exhibit negative cross-task reciprocity. These …
Persistent link: https://www.econbiz.de/10015062026