In this paper I present a model where a financial intermediary decides to open new security markets and offer them to boundedly rational investors. I show first that, if consumers have downward biased priors about payoffs, then no trade in the new securities may be verified. It is shown that no endogenous variable serves as a credible signal. Hence, only exogenous signals allows inference by investors. Incentives to disclosure depend upon its cost. I analyze this last issue with two-part tariff schemes.
Download Info
To our knowledge, this item is not available for
download. To find whether it is available, there are three
options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page
whether it is in fact available.
3. Perform a search for a similarly titled item that would be
available.
Publisher Info
Paper provided by Universidad de San Andres, Departamento de Economia in its series Working Papers with number
23.
Length: 30 pages Date of creation: Mar 2000 Date of revision:
Apr 2004 Publication status: Published in Quarterly Review of Economics and Finance, April 2004, Volume 44, pages 265-295 Handle: RePEc:sad:wpaper:23