SMU SOE Online Seminar (Mar 10, 2022, 4.00pm-5.30pm):Dynamic Screening with Verifiable Bankruptcy

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ABSTRACT We consider bankruptcy constraints in an otherwise standard dynamic screening model. We model bankruptcy as a verifiable event that occurs whenever the agent makes a per period loss. This gives rise to less stringent truth-telling constraints, as misreports become verifiable if they force the agent into bankruptcy. We solve for an optimal contract using a new method that ranks contracts in terms of the spread of the distribution of the induced continuation values for the agent. In a setting with continuous types, we derive a regularity condition that ensure that the optimal contract is deterministic. Keywords: Dynamic Screening, Bankruptcy, Verifiability, Mean Preserving Spread JEL Codes: D82, H57 Click here to view the speaker's profile.		This seminar will be held virtually via Zoom. A confirmation email with the Zoom details will be sent to the registered email by 9 March 2022.
		PRESENTER Daniel Krähmer University of Bonn
		RESEARCH INTERESTS Microeconomic Theory
		DATE: 10 March 2022 (Thursday)
		TIME: 4.00pm - 5.30pm