Regulating Consumer Bankruptcy: A Theoretical Inquiry
AbstractThis paper uses a principal/agent framework to analyze consumer bankruptcy. The bankruptcy discharge partly insures risk averse borrowers against bad income realizations, but also reduces the borrower's incentive to avoid insolvency. Among our results are: (a) High bankruptcy exemptions increase bankruptcy insurance but at the cost of reducing the borrower's incentives to stay solvent; (b) Reaffirmations -- renegotiations -- have ambiguous efficiency effects in general, but the right to renegotiate is especially valuable for relatively p
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Bibliographic InfoPaper provided by Yale School of Management in its series Yale School of Management Working Papers with number ysm128.
Date of creation: 01 Nov 1999
Date of revision: 01 Jul 2000
Other versions of this item:
- Adler, Barry & Polak, Ben & Schwartz, Alan, 2000. "Regulating Consumer Bankruptcy: A Theoretical Inquiry," The Journal of Legal Studies, University of Chicago Press, vol. 29(2), pages 585-613, June.
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- Gropp, Reint & Scholz, John Karl & White, Michelle J, 1997.
"Personal Bankruptcy and Credit Supply and Demand,"
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- Jochen Bigus & Eva-Maria Steiger, 2006. "When it pays to be honest: How a variable period of good conduct can improve incentives in personal bankruptcy proceedings," European Journal of Law and Economics, Springer, vol. 22(3), pages 233-253, November.
- Wenli Li, 2001. "To forgive or not to forgive : an analysis of U.S. consumer bankruptcy choices," Economic Quarterly, Federal Reserve Bank of Richmond, issue Spr, pages 1-22.
- Michelle J. White, 2011. "Corporate and Personal Bankruptcy Law," NBER Working Papers 17237, National Bureau of Economic Research, Inc.
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