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Real Investment Decisions Under Adjustment Costs and Asymmetric Information

Gaudet, Gérard; Lasserre, Pierre; Long, Ngo Van - Département des Sciences Économiques, École des … - 1999

We study the cost-of-adjustment model of investment when there is asymmetry of information between owners (the principal) and managers (the agent). Information asymmetry distorts the relationship between investment and the cost of capital for all agent types, and a regime of inaction appears...

Persistent link: https://www.econbiz.de/10005572518

A Walrasian theory of commodity money: Paradoxical results

Cuadras, Xavier - Department of Economics and Business, Universitat … - 2000

The objective of this note is to analyze some implications of the model of commodity money described in Banerjee and Maskin (1996) which may seem paradoxical. In order to do this, we incorporate a general production cost structure into the model. We focus on two different results. First, the...

Persistent link: https://www.econbiz.de/10005572651

Endogenous credit cycles

Martin, Alberto - Department of Economics and Business, Universitat … - 2004

I develop an overlapping-generations framework in which changes in lending standards generate endogenous cycles. In my economy, entrepreneurs who are privately informed about the quality of their projects need to borrow funds. Intermediaries screen entrepreneurs both through the amount of...

Persistent link: https://www.econbiz.de/10005572662

Auctioning incentive contracts; application to welfare-to-work programs

Koning, Pierre; Onderstal, S. - Centraal Planbureau (CPB), Government of the Netherlands - 2004

reintegrate unemployed people). We compare three simple auctions with the socially optimal mechanism and show that two of these … auctions approximate the optimal mechanism if the number of providers is large. Using simulations, we observe that competition … between three bidders is already sufficient for the outcome of these auctions to reach 95% of the optimal level of social …

Persistent link: https://www.econbiz.de/10005572681

Efficiency and Information Aggregation in Auctions

Swinkels, Jeroen M.; Pesendorfer, Wolfgang - In: American Economic Review 90 (2000) 3, pp. 499-525

The tension between allocative efficiency and information aggregation is explored in the context of an auction: k identical objects of unknown quality are auctioned off to n bidders whose tastes affect their valuation of an object of given quality. Bidders receive a signal about the quality of...

Persistent link: https://www.econbiz.de/10005572970

Motivating Wealth-Constrained Actors

Sappington, David E. M.; Lewis, Tracy R. - In: American Economic Review 90 (2000) 4, pp. 944-960

We examine how owners of productive resources (e.g. public enterprises or financial capital) optimally allocate their resources among wealth-constrained operators of unknown ability. Optimal allocations exhibit: (1) shared enterprise profit--the resource owner always shares the operator's...

Persistent link: https://www.econbiz.de/10005573077

Recent Theoretical Work on the Soft Budget Constraint

Maskin, Eric S. - In: American Economic Review 89 (1999) 2, pp. 421-425

Persistent link: https://www.econbiz.de/10005573101

How to Define Illegal Price Manipulation

Kyle, Albert S.; Viswanathan, S. - In: American Economic Review 98 (2008) 2, pp. 274-79

Persistent link: https://www.econbiz.de/10005573424

Information Aggregation in Polls

Morgan, John; Stocken, Phillip C. - In: American Economic Review 98 (2008) 3, pp. 864-96

We study information transmission via polling. A policymaker polls constituents, who differ in their information and ideology, to determine policy. Full revelation is an equilibrium in a poll with a small sample, but not with a large one. In large polls, full information aggregation can arise in...

Persistent link: https://www.econbiz.de/10005573474

On Asymmetric Information across Countries and the Home-Bias Puzzel

Matsen, Egil - Institutt for Samfunnsøkonomi, Norges … - 2001

This paper investigates the allocation decision of an investor who owns two projects, a domestic and a foreign one. A manager governs the expected return from each project, and the investor has less information on the actions of the foreign manager. The investor’s portfolio will be tilted...

Persistent link: https://www.econbiz.de/10005573896