Research Repository

Beliefs about Beliefs and Endogenous Formation of a Multi-lender Coalition in a Costly State Verification Model

Renou, Ludovic (2003) Beliefs about Beliefs and Endogenous Formation of a Multi-lender Coalition in a Costly State Verification Model. Working Paper. European University Institute Economics Working Papers ECO2003/21.

Full text not available from this repository.

Abstract

The paper generalizes a costly state verification model along two dimensions: 1) diversity of opinions, and 2) endogenous formation of a financial intermediary, modeled as a multilender coalition. In contrast with previous contributions (e.g. 35 and 36), our model can account for the coexistence of financial intermediation and direct lending (a non-trivial equilibrium). We prove the existence of such non-trivial equilibria and provide a complete characterization of them. Under some parameter conditions, the stronger the diversity of opinions, the smaller the expected coalition size.

Item Type: Monograph (Working Paper)
Uncontrolled Keywords: costly state verification; higher-order beliefs; multi-lender coalition; heterogenous prior; incomplete information
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 06 Jan 2013 23:12
Last Modified: 06 Jan 2013 23:12
URI: http://repository.essex.ac.uk/id/eprint/5007

Actions (login required)

View Item View Item