Moral hazard and nonexclusive contracts

Alberto Bisin, Danilo Guaitoli

    Research output: Contribution to journalArticle

    Abstract

    We study equilibria for economies with hidden action in environments in which the agents ' contractual relationships with competing financial intermediaries cannot be monitored (or are not contractible upon). We fully characterize equilibrium allocations and contracts for such economies, as well as discuss their welfare properties. Depending on the parameters of the economy, either the optimal action choice is not sustained in equilibrium or, if it is, agents necessarily enter into multiple contractual relationships and intermediaries make positive profits, even under free-entry conditions. The main features and implications of these environments are consistent with several stylized facts of markets for unsecured loans.

    Original languageEnglish (US)
    Pages (from-to)306-328
    Number of pages23
    JournalRAND Journal of Economics
    Volume35
    Issue number2
    StatePublished - Jun 2004

    Fingerprint

    Moral hazard
    Loans
    Financial intermediaries
    Profit
    Stylized facts
    Free entry
    Intermediaries
    Hidden action

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    Bisin, A., & Guaitoli, D. (2004). Moral hazard and nonexclusive contracts. RAND Journal of Economics, 35(2), 306-328.

    Moral hazard and nonexclusive contracts. / Bisin, Alberto; Guaitoli, Danilo.

    In: RAND Journal of Economics, Vol. 35, No. 2, 06.2004, p. 306-328.

    Research output: Contribution to journalArticle

    Bisin, A & Guaitoli, D 2004, 'Moral hazard and nonexclusive contracts', RAND Journal of Economics, vol. 35, no. 2, pp. 306-328.
    Bisin A, Guaitoli D. Moral hazard and nonexclusive contracts. RAND Journal of Economics. 2004 Jun;35(2):306-328.
    Bisin, Alberto ; Guaitoli, Danilo. / Moral hazard and nonexclusive contracts. In: RAND Journal of Economics. 2004 ; Vol. 35, No. 2. pp. 306-328.
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