Dynamic adverse selection and debt
نویسندگان
چکیده
منابع مشابه
Dynamic Adverse Selection and Debt
In many long-term relationships, parties may be reluctant to reveal their private information in order to benefit from their informational advantage in the future. We point out that the strategic use of debt by an uninformed party induces another party to reveal private information. Our argument, which is consistent with casual observation, is based on the idea that (renegotiable) debt is a cre...
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This key tension in this set of topics centers around the role of commitment in longterm contracting. Previously, we assumed full commitment power on the part of the Principal in setting all aspects of a contract. In a dynamic setting, the ful llment of the early stages of a contract provides information to the Principal about the agents type. Naturally, the Principal will be tempted to act on...
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ژورنال
عنوان ژورنال: European Economic Review
سال: 2001
ISSN: 0014-2921
DOI: 10.1016/s0014-2921(00)00080-5