Debt Rescheduling with Multiple Lenders: Relying on the Information of Others

type="main" xml:id="ecca12099-abs-0001" xml:lang="en"> <p>Are multiple-lender loans rescheduled more or less often than single-lender loans? Do multiple lenders react efficiently to new information? Our analysis emphasizes the role of the precision of information: lenders trade off benefits from immediate foreclosure against expected benefits of waiting for other lenders to act, given the likelihood that other lenders’ information is more precise. We analyse a Bayesian game where signals distributed to lenders may differ in precision and content. Equilibria display excessive liquidation or excessive rescheduling, depending on the likelihood of information. Outcomes are nevertheless second-best, given the constraint that private information cannot be merged.