Investor´s Distrust and the Marketing of New Financial Assets
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.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
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.
|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|
|Contact details of provider:|| Postal: |
Web page: http://www.udesa.edu.ar
More information through EDIRC
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.:
- Hayne E. Leland and David H. Pyle., 1976.
"Informational Asymmetries, Financial Structure, and Financial Intermediation,"
Research Program in Finance Working Papers
41, University of California at Berkeley.
- Leland, Hayne E & Pyle, David H, 1977. "Informational Asymmetries, Financial Structure, and Financial Intermediation," Journal of Finance, American Finance Association, vol. 32(2), pages 371-87, May.
- John Geanakoplos, 1989. "Game Theory Without Partitions, and Applications to Speculation and Consensus," Cowles Foundation Discussion Papers 914, Cowles Foundation for Research in Economics, Yale University.
- Paul Milgrom & Nancy L.Stokey, 1979.
"Information, Trade, and Common Knowledge,"
377R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Gabrielle Demange & Guy Laroque, 1993.
"Private Information and the Design of Securities,"
CEPR Financial Markets Paper
0036, European Science Foundation Network in Financial Markets, c/o C.E.P.R, 77 Bastwick Street, London EC1V 3PZ..
- Laurent Calvet & Martin Gonzalez-Eiras & Paolo Sodini, 2001.
"Financial Innovation, Market Participation and Asset Prices,"
Harvard Institute of Economic Research Working Papers
1928, Harvard - Institute of Economic Research.
- Calvet, Laurent & Gonzalez-Eiras, Martín & Sodini, Paolo, 2004. "Financial Innovation, Market Participation, and Asset Prices," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 39(03), pages 431-459, September.
- Calvet, Laurent & Gonzalez-Eiras, Martin & Sodini, Paolo, 2001. "Financial Innovation, Market Participation and Asset Prices," SSE/EFI Working Paper Series in Economics and Finance 464, Stockholm School of Economics.
- Laurent Calvet & Martin Gonzalez-Eiras & Paolo Sodini, 2003. "Financial Innovation, Market Participation and Asset Prices," NBER Working Papers 9840, National Bureau of Economic Research, Inc.
- Martin Gonzalez Eiras & Laurent Calvet & Paolo Sodini, 2004. "Financial Innovation, Market Participation, and Asset Prices," Working Papers 76, Universidad de San Andres, Departamento de Economia, revised Sep 2004.
- Peter DeMarzo & Darrell Duffie, 1999. "A Liquidity-Based Model of Security Design," Econometrica, Econometric Society, vol. 67(1), pages 65-100, January.
- Franklin Allen & Douglas Gale, 1999.
"Innovations in Financial Services, Relationships, and Risk Sharing,"
INFORMS, vol. 45(9), pages 1239-1253, September.
- H. Franklin Allen & Douglas Gale, . "Innovation in Financial Services, Relationships and Risk Sharing," Center for Financial Institutions Working Papers 97-26, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Magill, Michael & Shafer, Wayne, 1991. "Incomplete markets," Handbook of Mathematical Economics, in: W. Hildenbrand & H. Sonnenschein (ed.), Handbook of Mathematical Economics, edition 1, volume 4, chapter 30, pages 1523-1614 Elsevier.
- Skinner, Douglas J., 1996. "Are disclosures about bank derivatives and employee stock options 'value-relevant'?," Journal of Accounting and Economics, Elsevier, vol. 22(1-3), pages 393-405, October.
- Wolfgang Pesendorfer, 1991.
"Financial Innovation in a General Equilibrium Model,"
UCLA Economics Working Papers
635, UCLA Department of Economics.
- Pesendorfer Wolfgang, 1995. "Financial Innovation in a General Equilibrium Model," Journal of Economic Theory, Elsevier, vol. 65(1), pages 79-116, February.
- Heath, David & Jarrow, Robert & Morton, Andrew, 1992. "Bond Pricing and the Term Structure of Interest Rates: A New Methodology for Contingent Claims Valuation," Econometrica, Econometric Society, vol. 60(1), pages 77-105, January.
- Franklin Allen & Douglas Gale, 1990. "Incomplete Markets and Incentives to Set Up an Options Exchange*," The Geneva Risk and Insurance Review, Palgrave Macmillan, vol. 15(1), pages 17-46, March.
- Black, Fischer & Scholes, Myron S, 1973. "The Pricing of Options and Corporate Liabilities," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 637-54, May-June.
- Cox, John C & Ingersoll, Jonathan E, Jr & Ross, Stephen A, 1985. "A Theory of the Term Structure of Interest Rates," Econometrica, Econometric Society, vol. 53(2), pages 385-407, March.
- Gale, Douglas, 1992. "Standard Securities," Review of Economic Studies, Wiley Blackwell, vol. 59(4), pages 731-55, October.
When requesting a correction, please mention this item's handle: RePEc:sad:wpaper:23. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tamara Sulaque)The email address of this maintainer does not seem to be valid anymore. Please ask Tamara Sulaque to update the entry or send us the correct address
If references are entirely missing, you can add them using this form.