Contracting Sequentially with Multiple Lenders: the Role of Menus

Andrea Attar, Catherine Casamatta, Arnold Chassagnon and Jean-Paul Décamps

No 17-821, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: We study a capital market in which multiple lenders sequentially attempt at financing a single borrower under moral hazard. We show that restricting lenders to post take-it-or-leave-it offers involves a severe loss of generality: none of the equilibrium outcomes arising in this scenario survives if lenders offer menus of contracts. This result challenges the approach followed in standard models of multiple lending. From a theoretical perspective, we offer new insights on equilibrium robustness in sequential common agency games.

Keywords: Multiple Lending; Menus; Strategic Default; Common Agency; Bank Competition (search for similar items in EconPapers)
JEL-codes: D43 D82 G33 (search for similar items in EconPapers)
Date: 2017-06
New Economics Papers: this item is included in nep-ban, nep-cta and nep-mic
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Related works:
Journal Article: Contracting Sequentially with Multiple Lenders: The Role of Menus (2019)
Working Paper: Contracting Sequentially with Multiple Lenders: The Role of Menus (2019)
Working Paper: Contracting Sequentially with Multiple Lenders: The Role of Menus (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:31786

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