Document Type
Discussion Paper
Publication Date
12-1-1990
CFDP Number
963
CFDP Pages
14
Abstract
Either lending must be secured or otherwise some form of default or bankruptcy rules are required to provide a disincentive against strategic default. When many time periods are involved, the mere specification of a penalty which is sufficient for one period of trade, is not sufficient. The complete specification of even a two period game requires that both the treatment of creditors (including seniority conditions) and the nature of the rehabilitation of the debtor must be specified. This paper explores these problems.
Recommended Citation
Shubik, Martin, "Default and Bankruptcy in a Multistage Exchange Economy" (1990). Cowles Foundation Discussion Papers. 1206.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/1206