Securitization, Ratings, and Credit Supply

We show that the availability of credit ratings (or other public information) increases the allocative efficiency of cash flows by reducing costly retention, but reduces lending standards and can lead to an oversupply of credit. These findings are in contrast...

Uploaded: Nov 21, 2017

Liyan Yang | Working Paper No. 00018-00

Disclosure, Competition, and Learning from Asset Prices

This paper studies the classic information-sharing problem in a duopoly setting in which firms learn information from a financial market. By disclosing information, a firm incurs a proprietary cost of losing competitive advantage to its rival firm but benefits from...

Uploaded: Nov 21, 2017

Yaron Leitner, Bilge Yilmaz, Bilge Yilmaz | Working Paper No. 00016-00

Regulating a model (JFE, forthcoming)

We study a situation in which a regulator relies on risk models that banks produce in order to regulate them. A bank can generate more than one model and choose which models to reveal to the regulator. The regulator can...

Uploaded: Oct 8, 2017

Florian Hoffmann, Florian Hoffmann, Roman Inderst, Roman Inderst, Marcus Opp | Working Paper No. 00015-00

Only time will tell: A Theory of Deferred Compensation

We characterize optimal contracts in settings where the principal observes informative signals over time about the agent's one-time action. If both are risk-neutral contract relevant features of any signal process can be represented by a deterministic informativeness process that is...

Published: American Economic Review, 2020

Brendan Daley, Brett Green | Working Paper No. 00022-00

Bargaining and News

We study a bargaining model in which a buyer makes frequent offers to a privately informed seller, while gradually learning about the seller’s type from “news.” We show that the buyer’s ability to leverage this information to extract more surplus...

Uploaded: Mar 15, 2017

Efstathios Avdis | Working Paper No. 00013-00

Information Tradeoffs in Dynamic Financial Markets

In dynamic financial markets the stochastic supply of risky assets has a significant informational role. Contrary to static models, where it acts as "noise," in dynamic markets stochastic supply contains information about risk premiums. Acquiring private dividend information helps investors...