Featured Work
Testing Times: Reputation for Debt Discipline
Jul 10, 2026
How do countries build a reputation for debt discipline? I develop a continuous-time model in which an impatient government, whose income follows a jump-diffusion process, finances consumption by issuing long-term debt to patient investors. The opportunistic government cannot commit to future debt policies and builds reputation by mimicking a commitment type that maintains a stable debt-to-income ratio. I characterize a Markov perfect equilibrium in closed...
Optimal Time-Consistent Debt Policies
Aug 22, 2020
We study time-consistent debt policies in a trade-off model of debt in which the firm can freely issue new debt and repurchase existing debt. A debt policy is time-consistent if in any state equityholders prefer to follow it rather than to deviate from it but lose credibility in sustaining debt discipline in the future. In a class of policies, the optimal time-consistent debt policy consists...
Alternating-offer Bargaining with the Global Games Information Structure
Feb 28, 2018
This paper studies frequent-offer limits of perfect Bayesian equilibria in the alternating-offer bilateral bargaining model with private correlated values. The correlation of values is modeled via the global games information structure: values depend on the unobserved quality of the object and idiosyncratic factors. For any level of correlation we construct a punishing path that exhibits the Coasian dynamics and enables to sustain a variety of...
Selling to Advised Buyers
Feb 28, 2018
In many cases, buyers are not fully informed about their valuations and rely on the advice of biased experts. For example, the board of the bidder relies on the advice of managers when bidding for a target in a takeover contest. We study the design of sale mechanisms to such “advised buyers”. In static mechanisms, such as first- and second-price auctions, advisors communicate a coarsening...
