The Option Value of Waiting for Institutional Improvement: Real Options and Growth with Endogenous Beliefs
This paper explains why institutional reforms often fail to stimulate investment despite improving long-run fundamentals. We develop a real options...
Strategic Misreporting and Investment Distortions: How Agency Costs Shape Project Selection and Timing
This paper introduces a dynamic model of corporate investment that integrates misreporting incentives with leverage and growth option timing. Unlike...
Super-Pledgeability: How Progressive Taxation Solves Entrepreneurial Commitment Problems
This paper provides a novel efficiency rationale for progressive corporate taxation based on commitment problems in entrepreneurial finance. Poor...
Internal versus External Liquidity: Investment Efficiency under Market Frictions
This paper analyses how firms respond to liquidity shocks when asset prices are endogenously determined through matching frictions. Building on...
Market Information and the Impact of Public Health Insurance on the Private Insurance Market
We analyse how public health insurance affects private insurance markets in mixed public-private systems. Extending the standard selection framework...
Pension plan funding, risk sharing and technology choice
This paper presents a general equilibrium analysis on the interactions between pen- sion plan funding, capital structure, technology choice and the...
Long-term care insurance, annuities and asymmetric information: the case for bundling contracts
Within an asymmetric information set-up in which individuals differ in terms of their risk aversion and can choose whether or not to take preventative...
Incentive design under loss aversion
Compensation schemes often reward success but do not penalize failure. Fixed salaries with stock options or bonuses have this feature. Yet the...
Principal agent problems under loss aversion: an application to executive stock options
Executive stock options reward success but do not penalise failure. In contrast, the standard principal- agent model implies that pay is normally...
The Near Impossibility of Credit Rationing
Equilibrium credit rationing in the sense of Stiglitz and Weiss (1981) implies the marginal cost of funds to the borrower is infinite. So borrowers...
The near impossibility of credit rationing
Equilibrium credit rationing in the sense of Stiglitz and Weiss (1981) implies the marginal cost of funds to the borrower is infinite. So borrowers...
Credit Rationing May Involve Excessive Lending
It is typically assumed that equilibrium credit rationing implies insufficient lending. By combining hidden types and hidden action, this paper shows...
Entrepreneurial Wealth, The Level of Investment and Credit Policy
Empirical evidence suggests that capital market constraints prevent low-wealth individuals from setting up in business. This may be attributable to...
Liquidity Shortages and Inefficient Bank Lending
This paper develops a simple model of bank lending and liquidity shortages. Firms borrow from banks in the form of long term renegotiable deposit...
