This paper uses a general equilibrium model with collateralized borrowing to show that increases in risk can have ambiguous effects on leverage, loan margins, loan amounts, and asset prices. Increasing risk about future payoffs and endowments can lead to riskier loans with larger balances and lower spreads even when lenders are riskaverse and borrowers can default. As well, increasing the covar...

This paper shows the existence of a collateral equilibrium without assuming any hypotheses on the strict positivity, be they individual initial endowments, including the ex post initial endowments, or aggregated initial endowments. Because of dropping the strict positivity of social initial endowment we fail to get an equilibrium. Instead, we get a quasi-equilibrium. Then, appealing to the conc...

We present two experiments designed to investigate whether individuals’ notions of distributive justice are associated with their relative (within-society) economic status. Each participant played a specially designed four-person dictator game under one of two treatments, under one initial endowments were earned, under the other they were randomly assigned. The first experiment was conducted in...

This study suggests a two-step approach to identifying and interpreting regional convergence clubs in Europe. The first step calculates Bayesian probabilities for various assignments of regions to two clubs using a general stochastic space-time dynamic panel relationship between growth rates and initial levels of income as well as endowments of physical, knowledge and human capital. This approa...

Recent experimental research suggests that unpredicted behavior in the lab may result from endowment distribution and origin. We design an experiment to explore the impact of heterogeneous endowments and earned endowments on observed contributions in a linear public good game. Our results suggest that contribution levels were significantly lower when groups had heterogeneous rather than homogen...

The building blocks of our model are bounded-rational actors with specific sets of endowments: ’entrepreneurial spirit’, human capital and venture capital. The entrepreneurial behavior to found a firm is triggered by the individuals’ endowments, their social network and the evaluation of the economic situation. Bandwagon effects occur when high growth rates in emerging markets increase firm ent...