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
Authors:	Renou, Ludovic ; Carlier, Guillaume
Institutions:	School of Economics, University of Adelaide
Subject:	debt contracts \| diversity of opinions \| screening \| costly monitoring \| pooling

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Extent:	application/pdf
Series:	School of Economics Working Papers.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 2005-03 13 pages
Classification:	C7 - Game Theory and Bargaining Theory ; D8 - Information and Uncertainty ; G3 - Corporate Finance and Governance
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008520847