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Default and Punishment in General Equilibrium

Dubey, Pradeep K.; Geanakoplos, John; Shubik, Martin - 2004

We extend the standard model of general equilibrium with incomplete markets to allow for default and punishment by … compute how the size of their loan or the price they quote might affect default rates. It also makes for a simple equilibrium … equilibrium always exists in our model, and that default, in conjunction with refinement, opens the door to a theory of endogenous …

Persistent link: https://www.econbiz.de/10014070241

Default and Punishment in General Equilibrium

Dubey, Pradeep K.; Geanakoplos, John; Shubik, Martin - 2003

We extend the standard model of general equilibrium with incomplete markets to allow for default and punishment by … their loan or the price they quote might affect default rates. The equilibrium refinement we propose, in order to rule out … refined equilibrium always exists in our model, and that default, in conjunction with refinement, opens the door to a theory …

Persistent link: https://www.econbiz.de/10014128751

Default and Punishment in General Equilibrium

Dubey, Pradeep K.; Geanakoplos, John; Shubik, Martin - 2004

Persistent link: https://www.econbiz.de/10014074211

Competitive Pooling : Rothschild-Stiglitz Reconsidered

Dubey, Pradeep K.; Geanakoplos, John - 2003

We build a model of competitive pooling, which incorporates adverse selection and signalling into general equilibrium. Pools are characterized by their quantity limits on contributions. Households signal their reliability by choosing which pool to join. In equilibrium, pools with lower quantity...

Persistent link: https://www.econbiz.de/10014121720

Signalling and Default : Rothschild-Stiglitz Reconsidered

Dubey, Pradeep K.; Geanakoplos, John - 2003

In our previous paper we built a general equilibrium model of default and punishment in which equilibrium always exists … sales constraints as equilibrium signals. By specializing the default penalties and imposing an exclusivity constraint on …

Persistent link: https://www.econbiz.de/10014128748

Venture capital, double-sided adverse selection, and double-sided moral hazard

Houben, Eike - 2002 - First Version: March 2002, this Version: December 2002

The paper offers a new explanation for the widely observed use of redeemable and convertible preferred stock in venture capital finance. Redeemable and convertible preferred stocks can be used to endogenously allocate cash flow and control rights as a function of the state of nature, the...

Persistent link: https://www.econbiz.de/10011281511

Venture capital, double-sided adverse selection, and double-sided moral hazard

Houben, Eike - 2002

Persistent link: https://www.econbiz.de/10001656239

Screening and Adverse Selection in Frictional Markets

Lester, Benjamin - 2016

We incorporate a search-theoretic model of imperfect competition into an otherwise standard model of asymmetric information with unrestricted contracts. We develop a methodology that allows for a sharp analytical characterization of the unique equilibrium and then use this characterization to...

Persistent link: https://www.econbiz.de/10012995843

Screening and Adverse Selection in Frictional Markets

Venkateswaran, Venky - 2017

We incorporate a search-theoretic model of imperfect competition into a standard model of asymmetric information with unrestricted contracts. We characterize the unique equilibrium, and use our characterization to explore the interaction between adverse selection, screening, and imperfect...

Persistent link: https://www.econbiz.de/10012945860

Mixed signals : investment distortions with adverse selection

Darst, R. Matthew; Refayet, Ehraz - 2019

We study how adverse selection distorts equilibrium investment allocations in a Walrasian credit market with two-sided heterogeneity. Representative investor and partial equilibrium economies are special cases where investment allocations are distorted above perfect information allocations. By...

Persistent link: https://www.econbiz.de/10012181247