Debt Contracts with ex-ante and ex-post Asymmetric Information: An Example

Guillaume Carlier and Ludovic Renou
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Guillaume Carlier: Universite Paris IX-Dauphine

No 2005-03, School of Economics and Public Policy Working Papers from University of Adelaide, School of Economics and Public Policy

Abstract: We consider a simple model of lending and borrowing combining two informational problems: adverse selection and costly state verification. Our analysis highlights the interaction between these two informational problems. We notably show that the higher the monitoring cost, the less discriminating the optimal menu of contracts is.

Keywords: debt contracts; diversity of opinions; screening; costly monitoring; pooling (search for similar items in EconPapers)
JEL-codes: C7 D8 G3 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2005
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Debt contracts with ex-ante and ex-post asymmetric information: an example (2006)
Working Paper: Debt contracts with ex-ante and ex-post asymmetric information: an example (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:adl:wpaper:2005-03

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