RT Journal Article
SR 00
A1 Faure-Grimaud, Antoine
A1 Mariotti, Thomas
T1 Optimal Debt Contracts and the Single-Crossing Condition
JF Economics Letters
YR 1999
FD 1999-10
VO 65
IS 1
SP 85
OP 89
AB We argue that standard results proving that debt contracts can be obtained as the solution of an ex post adverse selection problem are derived without borrowers’ preferences satisfying a proper single crossing condition. For a simple example where this condition is restored, we show that the optimal financial contract is not a standard debt contract, but rather an option contract. This casts some doubts on the robustness of existing results.
PB Elsevier
SN 0165-1765
LK https://publications.ut-capitole.fr/id/eprint/1878/
UL http://tse-fr.eu/pub/3416