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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- P. Dubey & J. Geanakoplos & M . Shubik, 2001. "Default and Punishment in General Equilibrium," Department of Economics Working Papers 01-07, Stony Brook University, Department of Economics.
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"Markets and contracts,"
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Elsevier, vol. 47(3), pages 279-288.
- Alberto Bisin & John Geanakoplos & Piero Gottardi & Enrico Minelli & Heracles Polemarchakis, 2009. "Markets and Contracts," Working Papers 0915, University of Brescia, Department of Economics.
- Alberto Bisin & John Geanakoplos & Piero Gottardi & Enrico Minelli & Herakles Polemarchakis, 2010. "Markets and contracts," Economics Working Papers ECO2010/29, European University Institute.
- 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.
- Lutz G. Arnold & John G. Riley, 2009. "On the Possibility of Credit Rationing in the Stiglitz-Weiss Model," American Economic Review, American Economic Association, vol. 99(5), pages 2012-21, December.
- Erwan Quintin, 2012. "More punishment, less default?," Annals of Finance, Springer, vol. 8(4), pages 427-454, November.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
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