Search Results - subject:"Limited commitment"

Dynamic Relational Contracts under Complete Information

Thomas, Jonathan; Worrall, Tim - School of Economics, University of Edinburgh - 2014

This paper considers a long-term relationship between two agents who both undertake a costly action or investment that together produces a joint benefit. Agents have an opportunity to expropriate some of the joint benefit for their own use. Two cases are considered: (i) where agents are risk...

Persistent link: https://www.econbiz.de/10011093964

Insurance companies of the poor

Bold, Tessa; Dercon, Stefan - C.E.P.R. Discussion Papers - 2014

We model the emergence of formal insurance institutions as equilibria under limited contract enforceability where groups are required to be coalition-proof but also can use fines for enforcement. The model can generate coexistence of formal and informal groups without requiring heterogeneity in...

Persistent link: https://www.econbiz.de/10011096095

Delegation and Dynamic Incentives

Shin, Dongsoo; Strausz, Roland - C.E.P.R. Discussion Papers - 2014

incentives under limited commitment. It circumvents ratchet effects and facilitates the revelation of persistent private …

Persistent link: https://www.econbiz.de/10011083436

Consumer Standards as a Strategic Device to Mitigate Ratchet Effects in Dynamic Regulation

Fiocco, Raffaele; Strausz, Roland - C.E.P.R. Discussion Papers - 2014

Strategic delegation to an independent regulator with a pure consumer standard improves dynamic regulation by mitigating ratchet effects associated with short term contracting. A pure consumer standard alleviates the regulator's myopic temptation to raise output after learning the firm is...

Persistent link: https://www.econbiz.de/10011083936

Domestic or global imbalances? Rising income risk and the fall in the US current account

Broer, Tobias - In: Journal of Monetary Economics 64 (2014) C, pp. 47-67

When default leads to exclusion from financial markets, the implied loss of consumption smoothing opportunities is more costly when income volatility is high. A rise in income risk thus makes default less attractive, allowing creditors to relax borrowing limits. I show how, in an open economy,...

Persistent link: https://www.econbiz.de/10011120391

Taxing Capital? Not a Bad Idea After All!

Krueger, Dirk; Lustig, Hanno; Perri, Fabrizio - Center for Financial Studies - 2006

No. 2006/22 Evaluating Asset Pricing Models with Limited Commitment using Household Consumption Data …/22 Evaluating Asset Pricing Models with Limited Commitment using Household Consumption Data Dirk Krueger 1 , Hanno Lustig 2 … Keywords: Limited Commitment, Equity Premium, Stochastic Discount Factor, Household Consumption Data 1 Introduction …

Persistent link: https://www.econbiz.de/10005022427

Explaning the Correlation Between Output and Volatility in a Model of International Risk-Sharing and Limited Commitment

Reichlin, Pietro - Society for Economic Dynamics - SED - 2006

I study the constrained efficient allocations of a simple model of risk sharing and capital flows across countries assuming that each country cannot commit to fully repay its contract obligations. In the model, the degree of risk sharing and the amount of investment are interdependent. It is...

Persistent link: https://www.econbiz.de/10005090724

Evaluation asset pricing models with limited commitment using household consumption data

Krueger, Dirk; Lustig, Hanno; Perri, Fabrizio - 2006

We evaluate the asset pricing implications of a class of models in which risk sharing is imperfect because of the limited enforcement of intertemporal contracts. Lustig (2004) has shown that in such a model the asset pricing kernel can be written as a simple function of the aggregate consumption...

Persistent link: https://www.econbiz.de/10010298336

Evaluation asset pricing models with limited commitment using household consumption data

Krueger, Dirk; Lustig, Hanno; Perri, Fabrizio - Center for Financial Studies - 2006

Persistent link: https://www.econbiz.de/10010958661

Optimal limited authority for principal

Kolotilin, Anton; Li, Hao; Li, Wei - In: Journal of economic theory 148 (2013) 6, pp. 2344 - 2382

Persistent link: https://www.econbiz.de/10010257930