Signalling and Default: Rothschild-Stiglitz Reconsidered

Pradeep Dubey and John Geanakoplos ()
Additional contact information
John Geanakoplos: Cowles Foundation, Yale University, https://economics.yale.edu/people/faculty/john-geanakoplos

No 1305, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: In our previous paper we built a general equilibrium model of default and punishment in which equilibrium always exists and endogenously determines asset promises, penalties, and sales constraints. In this paper we interpret the endogenous sales constraints as equilibrium signals. By specializing the default penalties and imposing an exclusivity constraint on asset sales, we obtain a perfectly competitive version of the Rothschild-Stiglitz model of insurance. In our model their separating equilibrium always exists even when they say it doesn't.

Keywords: Default; incomplete markets; adverse selection; moral hazard; equilibrium refinement; signalling; endogenous assets (search for similar items in EconPapers)
JEL-codes: D4 D41 D5 D52 D8 D81 D82 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2001-05
New Economics Papers: this item is included in nep-ent, nep-gth and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://cowles.yale.edu/sites/default/files/files/pub/d13/d1305.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cwl:cwldpp:1305

Ordering information: This working paper can be ordered from
Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
The price is None.

Access Statistics for this paper

More papers in Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University Yale University, Box 208281, New Haven, CT 06520-8281 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Brittany Ladd ().