In this paper a bank faces excess demand in the loan market, can sort loan applicants by an observable measure of quality, and faces a small but positive probability of default. The bank uses two policies to allocate credit: (i) tighten restrictions on loan quality; (ii) limit the number of...

The paper analyzes choice-theoretic costly enforcement in an intertemporal contracting model with a differentially informed investor and entrepreneur. An intertemporal contract is modeled as a mechanism with limited commitment to payment and enforcement decisions. The paper shows that simple...

This paper analyzes intertemporal seller pricing and buyer purchasing behavior in a laboratory retail market with differential information. A seller posts one price each period that a buyer either accepts or rejects. Trade occurs over a sequence of "market periods" with a random termination...