Dear Friends and Colleagues:
We will have Professor Xiaojian Zhao, who is working at Hong Kong University of Science and Technology as our seminar speaker this Wednesday morning. The title is
Incentive-Compatibility in Financial Contracting with Limited Liabilities
Date/Time:
October 12th (Wednesday)/10:00 am - 11:30 am
Location: The museum of the school history (on the first floor in the School of Economics)
Abstract: In the presence of limited liability, the incentive compatibility constraints in financial contracting models with asymmetric information are weaker than assumed in much of the literature. In this paper, we identify the problem that has been overlooked in the literature and provide a rigorous proof of optimality of debt contracts under fairly general assumptions.
Best,
Lunan
