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When Randomization in Collective Tournaments is Profitable for the Principal

Lehmann, Stefanie Aniela - 2008

In the context of principal-agent theory risk is largely seen as a source that causes inefficiencies and lowers …

Persistent link: https://www.econbiz.de/10010270007

Failure of saddle-point method in the presence of double defaults

Lütkebohmert, Eva - 2009

We show that the saddle-point approximation method to quantify the impact of undiversi?ed idiosyncratic risk in a credit portfolio is inappropriate in the presence of double default effects. Speci?cally, we prove that there does not exist an equivalent formula to the granularity adjustment, that...

Persistent link: https://www.econbiz.de/10010270010

International financial shocks in emerging markets

Brei, Michael; Buzaushina, Almira - 2009

In the present paper, we develop a two-sector general equilibrium model of a small open economy to explore the transmission mechanisms of external financial shocks. In particular, we use a cash-in- advance model with limited participation augmented with a financial friction in the form of a...

Persistent link: https://www.econbiz.de/10010270011

Matching Heterogeneous Agents with a Linear Search Technology

Nöldeke, Georg; Tröger, Thomas - 2009

Steady state equilibria in heterogeneous agent matching models with search frictions have been shown to exist in Shimer and Smith (2000) under the assumption of a quadratic search technology. We extend their analysis to the commonly investigated linear search technology.

Persistent link: https://www.econbiz.de/10010270012

Risk and Expected Utility Theory

Pope, Robin; Selten, Reinhard - 2009

The paper re-expresses and complements arguments against the normative validity of expected utility theory in Robin …. It will be shown that there are serious objections against the modification of expected utility theory axiomatised by … Kreps and Porteus (1978, 1979). By contrast the umbrella theory proffered by Pope that she has now termed SKAT, the Stages …

Persistent link: https://www.econbiz.de/10010270013

Optimal Stopping with Dynamic Variational Preferences

Engelage, Daniel - 2009

theory. To illustrate results, we consider prominent examples: dynamic entropic risk measures and a dynamic version of …

Persistent link: https://www.econbiz.de/10010270015

Competitive Careers as a Way to Mediocracy

Kräkel, Matthias - 2009

We show that in competitive careers based on individual performance the least productive individuals may have the highest probabilities to be promoted to top positions. These individuals have the lowest fall-back positions and, hence, the highest incentives to succeed in career contests. This...

Persistent link: https://www.econbiz.de/10010270016

Standard Breach Remedies, Quality Thresholds, and Cooperative Investments

Stremitzer, Alexander - 2008

When investments are non-verifiable, inducing cooperative investments with simple contracts may not be as difficult as previously thought. Indeed, modeling “expectation damages” close to legal practice, we show that the default remedy of contract law induces the ?rst best. Yet, in order to...

Persistent link: https://www.econbiz.de/10010270017

Minimum Wages and Excessive Effort Supply

Kräkel, Matthias; Schöttner, Anja - 2009

It is well-known that, in static models, minimum wages generate positive worker rents and, consequently, ine?ciently low effort. We show that this result does not necessarily extend to a dynamic context. The reason is that, in repeated employment relationships, ?rms may exploit workers’ future...

Persistent link: https://www.econbiz.de/10010270019

Improved Modeling of Double Default Effects in Basel II - An Endogenous Asset Drop Model without Additional Correlation

Ebert, Sebastian; Lütkebohmert, Eva - 2009

In 2005 the Internal Ratings Based (IRB) approach of `Basel II' was enhanced by a `treatment of double default effects' to account for credit risk mitigation techniques such as ordinary guarantees or credit derivatives. This paper reveals several severe problems of this approach and presents a...

Persistent link: https://www.econbiz.de/10010270021