This note gives a simple proof of the existence and monotonicity of optimal debt contracts in simple models of borrowing and lending with ex-post asymmetric information, risk-averse agents and heterogeneous beliefs. Our argument is based on the concept of nondecreasing rearrangement and on a...

This note gives a simple proof of the existence and monotonicity of optimal debt contracts in simple models of borrowing and lending with ex-post asymmetric information, risk-averse agents and heterogeneous beliefs. Our argument is based on the concept of nondecreasing rearrangement and on a...

The article analyzes the Dynkin (1975) stochastic model of economic equilibrium. We solve a question regarding this model that was open for a long time. We provide arguments yielding a complete proof of Dynkin's existence theorem for equilibrium paths.

This paper generalizes a costly state verification model à la Townsend (1979) along two dimensions: 1) diversity of opinion and 2) endogenous formation of a financial intermediary, modeled as a multi-lender coalition. Main results are 1) lenders forming the coalition are neither too optimistic...

This paper generalizes a costly state verification model à la Townsend (1979) along two dimensions: 1) diversity of opinion and 2) endogenous formation of a financial intermediary, modeled as a multi-lender coalition. Main results are 1) lenders forming the coalition are neither too optimistic...