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oai:www.ideals.illinois.edu:2142/85606 2023-07-11 col_2142_5131 col_2142_14830 com_2142_5130 com_2142_14829 com_2142_8903

1997 Kahn, Charles M. Jorge Neto, Paulo De Melo 2015-09-25T22:47:34Z 2015-09-25T22:47:34Z 10000-01-01 1997 Renegotiation is valuable in debt contract because it mitigates the dead-weight losses of bankruptcy. This dissertation investigates the importance of a verification technology used before the renegotiation stage. Using the verification technology is optimal when the dead-weight losses associated with liquidating insolvent borrowers is greater than the cost of the verification technology. We show that the advantage of renegotiation and the optimal renegotiation procedure does not depend on the lender's ability to commit or not to the terms of a contract. The renegotiation procedure, however, depends on the acquisition and quality of the signal about the borrower's capacity to pay. The optimal renegotiation procedure uses a menu of offers when the lender does not gather information. The use of an accurate verification technology induces the lender to propose a unique renegotiation offer according to the signal received. A less accurate technology induces the lender to propose one single offer when the signal indicates solvency and a menu when the signal indicates insolvency. An equilibrium in which successful borrowers do not default is attainable when renegotiation is pursued with an accurate verification technology. Made available in DSpace on 2015-09-25T22:47:34Z (GMT). No. of bitstreams: 2 license.txt: 4848 bytes, checksum: 96035ab3f5e1c23cc7138a224ce498bd (MD5) 9717316.pdf: 4863329 bytes, checksum: aa8320b018f5593b8ee064e61057624e (MD5) Previous issue date: 1997 Embargo set by: Seth Robbins for item 86887 Lift date: Forever Reason: Restricted to the U of I community idenfinitely during batch ingest of legacy ETDs Restricted to the U of I community idenfinitely during batch ingest of legacy ETDs U of I Only 96 p. Thesis (Ph.D.)--University of Illinois at Urbana-Champaign, 1997. http://hdl.handle.net/2142/85606 (MiAaPQ)AAI9717316 eng Economics, Finance Renegotiation of Debt Contract With Partially Informed Lender text Economics Economics University of Illinois at Urbana-Champaign Dissertation Ph.D.