No-trade and Refined Equilibria for Secured Loans in Infinite Horizon

Mario R. Pascoa and Abdelkrim Seghir
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Mario R. Pascoa: University of Surrey
Abdelkrim Seghir: Ajman University

No 919, School of Economics Discussion Papers from School of Economics, University of Surrey

Abstract: When loans are secured but subject to utility penalties on default, notrade equilibria induced by unduly low repayment beliefs can be trivially found for nite horizon economies but not for in nite horizon ones. We illustrate this fact and propose also a re nement of equilibrium that gets rid of spurious no-trade outcomes when they do occur. Known existence results pass this re nement criterion.

JEL-codes: D52 D53 G33 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2019-03
New Economics Papers: this item is included in nep-upt
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:sur:surrec:0919

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