We analyze the impact of changing personal bankruptcy law in an economy with many principals and agents. Weakening personal bankruptcy law (making default more attractive) leads to a redistribution of debt from poor to rich agents. Due to the weakening of bankruptcy law, poor agents and principals are worse off and rich agents may be better off. “Excess Returns of Companies with a Distinguished Player”, with Matthias Blonski (Goethe-University Frankfurt) What are equilibrium share prices for companies with value increasing shareholders who can exert costly effort and trade shares? If the share price anticipates value increasing effort, value increasing shareholders want to sell their shares and save on the private effort costs. We show that rational Nash equilibria exist where shares are traded below their equilibrium value. This implies excess returns for firms with value increasing shareholders
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