Pavlov, Andrey; Wachter, Susan M. - In: Real Estate Economics 34 (2006) 4, pp. 479-496
Lenders are frequently accused of mispricing the put option embedded in nonrecourse lending. Prior research shows one lender's incentives to underprice. Here, we identify the conditions for a marketwide underpricing equilibrium. We demonstrate that, in a market with many players, given...