Su, Xunhua - Institutt for foretaksøkonomi, Norges Handelshøyskole … - 2010
With a more general setting, we illustrate that credit rationing in the Stiglitz and Weiss (1981) model is sensitive to the ranking of projects. Given that the ranking is according to the mean-preserving-spread, adverse selection and moral hazard cannot co-exist and credit rationing occurs only...