WORKING PAPERS

A new form of lending using digital collateral has recently emerged, most prominently in low and middle income countries. Digital collateral relies on ``lockout" technology, which allows the lender to temporarily disable the flow value of the collateral to the borrower without physically repossessing it. We explore the effect of this new form of credit both in a model and in a field experiment [Slides] [NBER Working Paper] [NBER Digest] [VoxDev]

R&R at The Journal of Finance (with Brendan Daley and Thomas Geelen)

Standard models assume that transactions are executed once the buyer and seller agree on a price. In practice, there is usually a period of ``due diligence" after terms have been negotiated but prior to execution. We analyze such a model. We show that the acquirer engages in “too much” due diligence relative to the social optimum. Nevertheless, allowing for due diligence can improve both total surplus and the seller’s payoff compared to a setting with no due diligence. [Slides]

(with Dong Wei)

Price discrimination and information discrimination are compliments; allowing for one activates a role for the other. The optimal mechanism features both:  buyers with higher private values face lower prices and observe a positive signal about product quality more frequently. [Slides]

R&R at The Review of Financial Studies (with Brendan Daley and Victoria Vanasco)

We investigate the role of scrutiny (e.g., credit ratings, analyst recommendations, or mandatory disclosures) on the security designed by a privately-informed issuer. The model predicts that issuers will design informationally sensitive securities (i.e., levered equity) when scrutiny is sufficiently intense. Otherwise, issuers opt for a standard debt contract.  Scrutiny increases efficiency by decreasing issuers' reliance on retention to signal quality, and perhaps counterintuitively, decrease price informativeness.