A Costly State Verification Model with Diversity of Opinions

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dc.contributor.author CARLIER, Guillaume
dc.contributor.author RENOU, Ludovic
dc.date.accessioned 2011-04-19T12:46:51Z
dc.date.available 2011-04-19T12:46:51Z
dc.date.issued 2005
dc.identifier.citation Economic Theory, 2005, 25, 2, 497-504
dc.identifier.issn 0938-2259
dc.identifier.uri http://hdl.handle.net/1814/16410
dc.description.abstract In simple models of borrowing and lending with ex-post asymmetric information, Gale and Hellwig (1985) and Williamson (1986) have shown that optimal debt contracts are simple debt contracts where borrowers repay a fixed interest rate whenever possible and lenders seize all the profit when borrowers default. In this note, we depart from their works by assuming that borrowers and lenders have heterogeneous beliefs, and show that simple debt contracts do not necessarily survive as optimal contracts.
dc.language.iso en
dc.publisher Springer
dc.subject costly state verification
dc.subject heterogeneity of beliefs
dc.title A Costly State Verification Model with Diversity of Opinions
dc.type Article
dc.identifier.doi 10.1007/s00199-003-0429-5
dc.neeo.contributor CARLIER|Guillaume|aut|
dc.neeo.contributor RENOU|Ludovic|aut|
dc.identifier.volume 25
dc.identifier.startpage 497
dc.identifier.endpage 504
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dc.identifier.issue 2

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