We study the optimality of debt through the interaction between security design and information acquisition. An impatient seller designs a security backed by her asset in place and a buyer decides whether to buy the security in order to provide liquidity. Facing different securities, the buyer...

Recent technology advances have enabled firms to flexibly process and analyze sophisticated employee performance data at a reduced and yet significant cost. We develop a theory of optimal incentive contracting where the monitoring technology that governs the above procedure is part of the...

We propose a theory of security design in financing entrepreneurial production, positing that the investor can acquire costly information on the entrepreneur's project before making the financing decision. When the entrepreneur has enough bargaining power in security design, the optimal security...