The Economics of Debt Collection: Enforcement of Consumer Credit Contract,”

Abstract In the U.S., third-party debt collection agencies employ more than 140,000 people and recover more than $50 billion each year, mostly from consumers. Informational, legal, and other factors suggest that original creditors should have an advantage in collecting debts owed to them. Then, why does the debt collection industry exist and why is it so large? Explanations based on economies of scale or specialization cannot address many of the observed stylized facts. We develop an application of common agency theory that better explains those facts. The model explains how reliance on an unconcentrated industry of third-party debt collection agencies can implement an equilibrium with more intense collections activity than creditors would implement by themselves. We derive empirical implications for the nature of the debt collection market and the structure of the debt collection industry. A welfare analysis shows that, under certain conditions, an equilibrium in which creditors rely on third-party debt collectors can generate more credit supply and aggregate borrower surplus than an equilibrium where lenders collect debts owed to them on their own. There are, however, situations where the opposite is true. The model also suggests a number of policy instruments that may improve the functioning of the collections market

The role of fundamental solution in Potential and Regularity Theory for subelliptic PDE

In this survey we consider a general Hormander type operator, represented as a sum of squares of vector fields plus a drift and we outline the central role of the fundamental solution in developing Potential and Regularity Theory for solutions of related PDEs. After recalling the Gaussian behavior at infinity of the kernel, we show some mean value formulas on the level sets of the fundamental solution, which are the starting point to obtain a comprehensive parallel of the classical Potential Theory. Then we show that a precise knowledge of the fundamental solution leads to global regularity results, namely estimates at the boundary or on the whole space. Finally in the problem of regularity of non linear differential equations we need an ad hoc modification of the parametrix method, based on the properties of the fundamental solution of an approximating problem

Parametrix approximations for option prices

We propose the use of a classical tool in PDE theory, the parametrix method, to build approximate solutions to generic parabolic models for pricing and hedging contingent claims. We obtain an expansion for the price of an option using as starting point the classical Black&Scholes formula. The approximation can be truncated to any number of terms and easily computable error measures are available

Model error analysis methods

A review of some techniques for the analysis of specification errors in stochastic models based on diffusion equations

Estimating Dynamical parameters in Yield curve models

No abstract availabl

Linear models for style analysis

No abstract availabl

"LAWS OF LARGE NUMBERS" IN CONTINUUM ECONOMIES

In continuum economies when some random allotment is independently made to the agents, it is required that the effective result of the allotment be equal to its expected value. This statement is upheld by some informal statement of a "law of large numbers". In the standard version of this statement this properties are contradictory. In the paper we illustrate the phenomenon and suggest a simple and intuitive solution based on mean square integration