Debt contracts with ex-ante and ex-post asymmetric information: an example.

We consider a simple model of lending and borrowing combining two informational problems: adverse selection and costly state verification. Our analysis highlights the interaction between these two informational problems. We notably show that the higher the monitoring cost, the less discriminating the optimal menu of contracts is.

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Year of publication:	2005-02-03
Authors:	Carlier, G. ; Renou, L.
Institutions:	EconWPA
Subject:	debt contracts \| diversity of opinions \| screening \| costly monitoring \| pooling

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Extent:	application/pdf
Series:	Game Theory and Information.
Type of publication:	Book / Working Paper
Notes:	Type of Document - pdf. See Ludovic Renou webpage for a technical appendix.
Classification:	D8 - Information and Uncertainty ; G3 - Corporate Finance and Governance
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005550923