Barney Hartman-Glaser
Featured Work
The Insurance is the Lemon: Failing to Index Contracts
Dec 16, 2019
We model the widespread failure of contracts to share risk using available indices. A borrower and lender can share risk by conditioning repayments on an index. The lender has private information about the ability of this index to measure the true state the borrower would like to hedge. The lender is risk averse, and thus requires a premium to insure the borrower. The borrower, however,...
Corporate Liquidity Management under Moral Hazard
Apr 9, 2019
We present a model of liquidity management and financing decisions under moral hazard in which a firm accumulates cash to forestall liquidity default. When the cash balance is high, a tension arises between accumulating more cash to reduce the probability of default and providing incentives for the manager. When the cash balance is low, the firm hedges against liquidity default by transferring cash flow risk...
