In this paper, we propose a model of credit rating agencies using the global games framework to incorporate information and coordination problems. We introduce a refined utility function of a credit rating agency that, additional to reputation maximization, also embeds aspects of competition and...

Remuneration systems in the banking industry, particularly bonus payments, have frequently been blamed for contributing to the build-up of risks leading to the recent financial crisis. In our model banks compete for managerial talent that is private information. Competition for talent sets...