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Imperfect state verification and financial contracting

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  • Joseph G. Haubrich

Abstract

An argument that in a costly state verification model of financial contracting, relaxing the assumption of perfect verification makes the measurement of information difficult.

Suggested Citation

  • Joseph G. Haubrich, 1995. "Imperfect state verification and financial contracting," Working Paper 9506, Federal Reserve Bank of Cleveland.
  • Handle: RePEc:fip:fedcwp:9506
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    References listed on IDEAS

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    1. Lacker, Jeffrey M & Weinberg, John A, 1989. "Optimal Contracts under Costly State Falsification," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1345-1363, December.
    2. Townsend, Robert M, 1987. "Models as Economies," Economic Journal, Royal Economic Society, vol. 98(390), pages 1-24, Supplemen.
    3. Gorton, Gary B. & Haubrich, Joseph G., 1987. "Bank deregulation, credit markets, and the control of capital," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 26(1), pages 289-333, January.
    4. Jerry R. Green & Jean-Jacques Laffont, 1986. "Partially Verifiable Information and Mechanism Design," Review of Economic Studies, Oxford University Press, vol. 53(3), pages 447-456.
    5. Kim C. Border & Joel Sobel, 1987. "Samurai Accountant: A Theory of Auditing and Plunder," Review of Economic Studies, Oxford University Press, vol. 54(4), pages 525-540.
    6. Ronald A. Dye, 1986. "Optimal Monitoring Policies in Agencies," RAND Journal of Economics, The RAND Corporation, vol. 17(3), pages 339-350, Autumn.
    7. Dilip Mookherjee & Ivan Png, 1989. "Optimal Auditing, Insurance, and Redistribution," The Quarterly Journal of Economics, Oxford University Press, vol. 104(2), pages 399-415.
    8. Grossman, Sanford J & Hart, Oliver D, 1983. "An Analysis of the Principal-Agent Problem," Econometrica, Econometric Society, vol. 51(1), pages 7-45, January.
    9. Douglas W. Diamond, 1984. "Financial Intermediation and Delegated Monitoring," Review of Economic Studies, Oxford University Press, vol. 51(3), pages 393-414.
    10. Williamson, Stephen D., 1986. "Costly monitoring, financial intermediation, and equilibrium credit rationing," Journal of Monetary Economics, Elsevier, vol. 18(2), pages 159-179, September.
    11. Kim, Son Ku, 1995. "Efficiency of an Information System in an Agency Model," Econometrica, Econometric Society, vol. 63(1), pages 89-102, January.
    12. Singh, Nirvikar, 1991. "Posterior-preserving information improvements and principal-agent relationships," Journal of Economic Theory, Elsevier, vol. 55(1), pages 192-202, October.
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    Cited by:

    1. Duncan, Alfred & Nolan, Charles, 2014. "Disputes, Debt and Equity," SIRE Discussion Papers 2015-29, Scottish Institute for Research in Economics (SIRE).
    2. Dennis, Richard & Kirsanova, Tatiana, 2016. "Computing Markov-Perfect Optimal Policies In Business-Cycle Models," Macroeconomic Dynamics, Cambridge University Press, vol. 20(07), pages 1850-1872, October.
    3. Duncan, Alfred & Nolan, Charles, 2014. "Disputes, Debt and Equity," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-29, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

    More about this item

    Keywords

    Contracts ; Information theory;

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