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The Model with Positive Discount Rates
The Analysis of the Recursive
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alternating calls analogous analysis anymore assumed assumption backward induction bargaining model presented bargaining outcome bargaining process bargaining solution Binmore Bronars and Deere cake calling at t=0 calls at T-2A CATHERWOOD LIBRARY characterised common discount rate condition u(0)z0 corner solution DEBT AND FINITE-HORIZON defined disagreement discount factor econometric enforce exogenous probability finite firm calls firm‘s and workers firm‘s debt repayment firm‘s payoff framework Gross returns implies income interests mature interval of length Labour Market limit-solution maximand microfoundation monotonicity condition Nash Nash-maximand obtained option levels outstanding debt payoff when calling Perfect Equilibrium payoffs Perfect Equilibrium solution PISSARIDES players positive discount rate probability of break-up Proposition in Appendix R-De Recursive Solution Acceptability Recursive Substitution solution reduced relevant rewritten rolling debt RSAC hold Rubinstein 1982 Rubinstein and Wolinsky Rubinstein‘s model shared shrinks to zero solution A5 Solution Acceptability Conditions status-quo positions stays intrinsically constant strictly positive subcase terminal condition terminal date workers calling workforce