On existence in equilibrium models with endogenous default
The equilibrium concept defined by Dubey et al. (DGS, 1990, 2000, 2005) generates equilibria such that asset buyers could raise expected returns by paying more for the assets that they purchase. A simple example shows that, in fact, all equilibria may be return-dominated in that sense. Universal existence in the DGS model thus depends critically on the assumption that lenders are unable to exploit an obvious profit opportunity.
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Volume (Year): 49 (2013)
Issue (Month): 5 ()
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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"Default and Punishment in General Equilibrium,"
Cowles Foundation Discussion Papers
1304R5, Cowles Foundation for Research in Economics, Yale University, revised Mar 2004.
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- Arnold, Lutz G., 2005. "On the Possibility of Credit Rationing in the Stiglitz-Weiss Model," University of Regensburg Working Papers in Business, Economics and Management Information Systems 403, University of Regensburg, Department of Economics.
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