omment on "Commitment vs. Flexibility"

• Autores: Attila Ambrus, Gregory Egorov
• Localización: Econométrica: Journal of the Econometric Society, ISSN 0012-9682, Vol. 81, Nº 5, 2013, pág. 2013
• Idioma: inglés
• Texto completo no disponible (Saber más ...)
• Resumen

  • This comment corrects two results in the 2006 Econometrica paper by Amador, Werning, and Angeletos (AWA), that features a model in which individuals face a trade-off between flexibility and commitment. First, in contrast to Proposition 1 in AWA, we show that money-burning can be part of the ex ante optimal contract when there are two states. Second, in contrast to Proposition 2 in AWA, we show that money-burning can be imposed at the top (in the highest liquidity shock state), even when there is a continuum of states. We provide corrected versions of the above results. [PUBLICATION ABSTRACT]