When Opposites Attract: Is the Assortative Matching Always Positive?
AbstractThis paper shows that the positive assortative matching of Ghatak (1999) and Van Tassel (1999) is not a general result and always depends on the distribution of safe and risky types. Some new implications are: (i) borrowers may be better off by forming mixed groups. (ii) a mixed pooling equilibrium is possible when homogeneous pooling equilibria do not exist, and even when the reservation income of borrowers is equal to zero.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 28881.
Date of creation: 17 Feb 2011
Date of revision:
joint liability lending; assortative matching; screening;
Find related papers by JEL classification:
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- G20 - Financial Economics - - Financial Institutions and Services - - - General
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-05 (All new papers)
- NEP-CTA-2011-03-05 (Contract Theory & Applications)
- NEP-MFD-2011-03-05 (Microfinance)
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