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The Lender-Borrower Relationship with Risk Averse Lenders

Pausch, Thilo - 2003

This paper analyzes optimal incentive compatible debt contracts when lenders are risk averse. The decisive factor in … this regard is that risk aversion requiresto consider further sources of risk the lenders are exposed to. The main … due to risk aversion oflenders which is reinforced by the introduction of a further source of risk – are shown to be in …

Persistent link: https://www.econbiz.de/10010263002

Cognitive abilities and household financial decision making

Agarwal, Sumit; Mazumder, Bhash - 2010

We analyze the effects of cognitive abilities on two examples of consumer financial decisions where suboptimal behavior is well defined. The first example refers to consumers who transfer the entire balance from an existing credit card account to a new account, but use the new card for...

Persistent link: https://www.econbiz.de/10010292206

Monitoring a common agent : implications for financial contracting

Khalil, Fahad; Martimort, David; Parigi, Bruno Maria - 2005

We study the problem of multiple principals who want to obtain income from a privately informed agent and design their contracts non-cooperatively. Our analysis reveals that the degree of coordination between principals has strong implications for the shapes of contracts and the amount of...

Persistent link: https://www.econbiz.de/10010261310

How Often Should You Open the Door? Optimal Monitoring to Screen Heterogeneous Agents

Ichino, Andrea; Muehlheusser, Gerd - 2004

This paper shows that monitoring too much a partner in the initial phase of a relationship may not be optimal if the goal is to determine his loyalty to the match and if the cost of ending the relationship increases over time. The intuition is simple: by monitoring too much we learn less on how...

Persistent link: https://www.econbiz.de/10010261760

On the economics and biology of trust

Fehr, Ernst - 2008

just a special case of risk-taking, but based on important forms of social preferences such as betrayal aversion …

Persistent link: https://www.econbiz.de/10010269174

Competition and educational productivity: Incentives writ large

MacLeod, William Bentley; Urquiola Soux, Miguel - 2012

to be more mixed and modest than expected. We suggest that this in fact should not be surprising, since economic theory …

Persistent link: https://www.econbiz.de/10010291369

Awareness and stock market participation

Guiso, Luigi; Jappelli, Tullio - 2005

The paper documents lack of awareness of financial assets in the 1995 and 1998 Bank of Italy Surveys of Household Income and Wealth. It then explores the determinants of awareness, and finds that the probability that survey respondents are aware of stocks, mutual funds and investment accounts is...

Persistent link: https://www.econbiz.de/10010298272

Financial advisors: A case of babysitters?

Hackethal, Andreas; Haliassos, Michael; Jappelli, Tullio - 2009

with lower total and excess account returns, higher portfolio risk and probabilities of losses, and higher trading …

Persistent link: https://www.econbiz.de/10010303719

Investment in financial literacy and saving decisions

Jappelli, Tullio; Padula, Mario - 2011

We present an intertemporal consumption model of consumer investment in financial literacy. Consumers benefit from such investment because their stock of financial literacy allows them to increase the returns on their wealth. Since literacy depreciates over time and has a cost in terms of...

Persistent link: https://www.econbiz.de/10010308561

Liquidity and Ambiguity: Banks or Asset Markets?

Eichberger, Jürgen; Spanjers, Willy - 2007

We study the impact of ambiguity on two alternative institutions of financial intermediation in an economy where consumers face uncertain liquidity needs. The ambiguity the consumers experience is modeled by the degree of confidence in their additive beliefs. We analyze the optimal liquidity...

Persistent link: https://www.econbiz.de/10011422151