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We consider a principal-agent model of adverse selection where, in order to trade with the principal, the agent must undertake a relationship-specific investment which affects his outside option to trade, i.e. the payoff that he can obtain by trading with an alternative principal. This creates a...
Persistent link: https://www.econbiz.de/10005022159
We consider a principal-agent model of adverse selection where, in order to trade with the principal, the agent must undertake a relationship-specific investment which affects his outside option to trade, i.e. the payoff that he can obtain by trading with an alternative principal. This creates a...
Persistent link: https://www.econbiz.de/10008565468
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We present a model of intergenerational transmission of pro-social values in which parents have information about relevant characteristics of society that is not directly available to their children. Differently from existing models of cultural transmission of values (such as Bisin and Verdier,...
Persistent link: https://www.econbiz.de/10015217494
We build a model where introspection matters - i.e., people rationally form expectations about others using the lens of their own attitudes. Since trustworthy individuals are more "optimistic" about people than opportunists, they are less afraid to engage in market-based exchanges, where they...
Persistent link: https://www.econbiz.de/10015217498
We consider a model of securities issues where the quality of securities is private information to the issuer, and firms of higher quality are more reluctant to issue securities than low quality firms. We show that, when the issuer directly trades with investors, market breakdown may occur. This...
Persistent link: https://www.econbiz.de/10015217499
Descriptive norms - the behavior of other individuals in one's reference group - play a key role in shaping individual decisions. When characterizing the behavior of others, a standard approach in the literature is to focus on average behavior. In this paper, we argue both theoretically and...
Persistent link: https://www.econbiz.de/10013480176