Default, Credit Scoring, and Loan-to-Value: a Theoretical Analysis under Competitive and Non-Competitive Mortgage Markets

Consistent with existing literature, we first show that when borrowers?default probability on the mortgage loan is unobservable to the lender, the latter can screen borrowers by their combined choice of loan-to-value (LTV) ratio and interest rate. We further demonstrate that when borrowers also signal their default risk by acquiring a credit score, then a combined separating signaling and screening equilibrium is attained. If the signaling cost is sufficiently small, the combined signaling and screening equilibrium dominates the screening only equilibrium under both competitive and non-competitive market frameworks. However, while, under the competitive setting, borrowers benefit from constituting a credit scoring signaling system, the prospective gain is shifted to lenders under imperfect competition. Finally, we show that under both competitive and non-competitive combined signaling and screening equilibria, high and low risk borrowers, while acquiring distinct credit scores (and therefore paying different interest rates) might realize higher, lower, or identical LTV ratios. Hence, any empirical test of the relation between LTV ratio and default risk must incorporate the interrelation among the LTV ratio, credit score, and interest rate.

Screening Mortgage Default Risk: A Unified Theoretical Framework

This study developed a unified framework for theoretically analyzing a set of mortgage attributes that screens borrower types according to their unobservable default risk. In the presence of asymmetric information, a self-selection process is attained, where lower default risk type borrowers choose a mortgage loan with constant over graduated payment, constant over price-leveladjusted payment, adjustable over fixed rate, low over high loanto-value ratio, and short over long maturity. The study thus examines, among others, various mortgage attributes, which have never previously been considered in the context of mortgage default under asymmetric information. Accordingly, the theoretical predictions produce further grounds for empirical research on mortgage default.

Curve Reconstruction via the Global Statistics of Natural Curves

Reconstructing the missing parts of a curve has been the subject of much computational research, with applications in image inpainting, object synthesis, etc. Different approaches for solving that problem are typically based on processes that seek visually pleasing or perceptually plausible completions. In this work we focus on reconstructing the underlying physically likely shape by utilizing the global statistics of natural curves. More specifically, we develop a reconstruction model that seeks the mean physical curve for a given inducer configuration. This simple model is both straightforward to compute and it is receptive to diverse additional information, but it requires enough samples for all curve configurations, a practical requirement that limits its effective utilization. To address this practical issue we explore and exploit statistical geometrical properties of natural curves, and in particular, we show that in many cases the mean curve is scale invariant and oftentimes it is extensible. This, in turn, allows to boost the number of examples and thus the robustness of the statistics and its applicability. The reconstruction results are not only more physically plausible but they also lead to important insights on the reconstruction problem, including an elegant explanation why certain inducer configurations are more likely to yield consistent perceptual completions than others.Comment: CVPR versio

To browse, or not to browse? Third person effect among Ultra-Orthodox Jewish women, in regards to the perceived danger of the internet

Abstract The study looks at Jewish ultra-Orthodox women who use modern technologies, for purposes that are illegitimate in their community. Subjects’ perceived impacts of the Internet on self and others are analyzed, demonstrating a "third-person effect" in regards to the perceived dangers originating from the Internet. The correlations and possible implications of the "third-person effect" are discussed

Pre-Contractual Reliance

During contractual negotiations, parties often make (reliance) expenditures that would increase the surplus should a contract be made. This paper analyzes decisions to invest in pre-contractual reliance under alternative legal regimes. Investments in reliance will be socially suboptimal in the absence of any pre-contractual liability -- and will be socially excessive under strict liability for all reliance expenditures. Given the results for these polar cases, we focus on exploring how 'intermediate' liability rules could be best designed to induce efficient reliance decisions. One of our results indicates that the case for liability is shown to be stronger when a party retracts from terms that it has proposed or from preliminary understandings reached by the parties. Our results have implications, which we discuss, for various contract doctrines and debates. Finally, we show that pre-contractual liability does not necessarily have an overall adverse effect on parties' decisions to enter into contractual negotiations.

The Myth of the ‘Opportunity to Read’ in Contract Law

Standard form contracts in consumer transactions are usually not read by consumers. This unreadness of contracts creates opportunities for drafters to engage in unfair trade practices. Various doctrines of contracts and consumer protection law address this concern. One of the prominent solutions coming out of recent proposals for reform is to give individuals a more substantial opportunity to read the contract before manifesting assent. With the greater opportunity to read, more transactors will actually read the terms and assent to the boilerplate will be more robust. This Essay argues that solutions that focus on providing consumers an opportunity to read are useless, and can potentially be harmful. Most likely, greater opportunity to read would not produce greater readership of contracts—not the type that can help people make informed decisions—and the purpose of this solution would not be achieved, and could have unintended consequences. Even if the compliance with the requirement of opportunity-to-read is fairly cheap (e.g., giving consumers access to the boilerplate in advance), making this a central feature of the legal regulation of standard form contracts makes little sense. The paper ends by proposing non-legal approaches to making the contract terms more transparent, by building on market devices such as ratings and labeling

The Phonetic Representation of Spoken Language in Modern Hebrew Literature

The Phonetic Representation of Spoken Language in Modern Hebrew Literature – Written language normatively transmits the full graphic pattern of a word without deviating from the spelling rules of a particular language. However, when graphic signs are intended to represent the spoken language used in natural conversation, the question of the phonetic imitation of spoken language in written texts arises. The present article deals with the position of spoken language in Hebrew narrative fiction and drama, and the modes of its representation from 1948 on, including both original Hebrew works and those translated from English into Hebrew. This issue is discussed against the background of such relevant broader issues as: the special situation of Hebrew, which had long been used as a written language only, devoid of the varied functions of spoken language; linguistic-stylistic norms in Hebrew literature from 1948 on and the changes they underwent; Hebrew writers' and translators' awareness of the principles of spoken language in general, and those of the Hebrew vernacular in particular; differences in dialogue formation between various literary sub-systems: drama as distinct from narrative fiction and original literature as distinct from translated literature, including some cross-sections of both. The issues are discussed from both the synchronic and diachronic points of view.La représentation phonétique de la langue parlée dans la littérature hébraïque moderne – La langue écrite transmet de façon normative le modèle graphique complet d'un mot sans dévier des règles orthographiques d'une langue donnée. Cependant, lorsque les signes graphiques visent à représenter la langue parlée utilisée dans une conversation naturelle, le problème de l’imitation phonétique de la langue parlée retranscrite dans un texte se pose. Le présent article traite de la position de la langue parlée dans les fictions narratives et dans le théâtre en hébreu, ainsi que ses modes de représentation à partir de 1948 dans des oeuvres en hébreu, y compris des oeuvres traduites de l'anglais. Cette question est abordée en faisant fond sur d'autres questions plus vastes : la situation particulière de l'hébreu, qui a longtemps été exclusivement une langue écrite dénuée des fonctions variées d'une langue parlée; les normes stylistiques-linguistiques de la littérature hébraïque depuis 1948 et leurs transformations; la conscience que les écrivains et les traducteurs hébreux avaient des principes de la langue parlée en général et de ceux du vernaculaire hébreu en particulier; les différences dans la formation des dialogues entre les divers sous-systèmes littéraires : le théâtre par rapport à la fiction narrative et la littérature en langue d'origine par rapport à la littérature traduite, y compris les intersections des deux. Ces questions sont abordées sous un angle tant synchronique que diachronique

\u27Agreeing to Disagree\u27: Filling Gaps in Deliberately Incomplete Contracts

Incomplete contracts have always been viewed as raising the following challenge for contract law: does the incompleteness-or, indefiniteness, as it is usually called-rise to such a level that renders the agreement legally unenforceable? When the indefiniteness concerns important terms, it is presumed that the parties have not reached an agreement to which they intend to be bound. This fundamental policy is the upshot of the view that contracts should be made by the parties, not by the courts. \u27 When, in contrast, the indefiniteness concerns less important terms, courts supplement the agreement with gap fillers and enforce the supplemented contract

Against Irreparable Benefits

The conventional approach to preliminary relief focuses on irreparable harm but entirely neglects irreparable benefits. That is hard to understand. Errant irreversible harms are important because they distort incentives and have lasting distributional co