A signaling approach to soft budgets

Salem Saljanin

Economics Letters, 2011, vol. 111, issue 3, 272-274

Abstract: A new explanation for soft budget constraints is given. Projects of an agent are often the more profitable, the more confident the agent is in the principal's competence and/or supports. Principals can signal support and/or competence through a soft budget constraint.

Keywords: Soft; budget; constraint; Signaling (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:111:y:2011:i:3:p:272-274

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