Lender learning and entry under general demand uncertainty

Lender learning and entry under general demand uncertainty

In this paper, we examine the effect of potential entry on learning by a lender when the demand shock has a general distribution. We show that under this type of noise, entry does not lead to any changes in the equilibrium expected signals and therefore, there is no effect on learning by the lender,...

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Veröffentlicht in:Review of economic design 2011-06, Vol.15 (2), p.163-175
Hauptverfasser: Jain, Neelam, Mirman, Leonard J.
Format: Artikel
Sprache:eng
Schlagworte:
Behavioral/Experimental Economics
Economic theory
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Equilibrium
Financial services
Game Theory
Loans
Microeconomics
Organizational learning
Original Paper
Profits
Social and Behav. Sciences
Studies
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Beschreibung
Zusammenfassung:In this paper, we examine the effect of potential entry on learning by a lender when the demand shock has a general distribution. We show that under this type of noise, entry does not lead to any changes in the equilibrium expected signals and therefore, there is no effect on learning by the lender, unlike the case when noise is uniformly distributed. The result holds even when contracts are not observable.
ISSN:1434-4742
1434-4750
DOI:10.1007/s10058-011-0108-0