A finite-life private-information theory of unsecured consumer debt

A finite-life private-information theory of unsecured consumer debt

We present a theory of unsecured consumer debt that does not rely on utility costs of default or on enforcement mechanisms that arise in repeated-interaction settings. The theory is based on private information about a person’s type and on a person’s incentive to signal his type to entities other than creditors. Specifically, debtors signal their low-risk status to insurers by avoiding default ...

A Finite-Life Private-Information Theory of Unsecured Debt

We present a theory of unsecured consumer debt that recognizes a debtor’s legal right to default. Our theory does not rely on psychological costs of default (or stigma) nor does it rely on enforcement mechanisms that arise in repeated-game settings. Our theory is based on private information about a person’s type and on a person’s incentive to signal his type by avoiding default in the credit m...

Finite-Life Private Information Theory of Unsecured Debt

Working Paper No. 07-14 a Finite-life Private-information Theory of Unsecured Consumer Debt

We present a theory of unsecured consumer debt that does not rely on utility costs of default or on enforcement mechanisms that arise in repeated-interaction settings. The theory is based on private information about a person’s type and on a person’s incentive to signal his type to entities other than creditors. Specifically, debtors signal their low-risk status to insurers by avoiding default ...

Unsecured consumer debt and mental health outcomes in middle-aged and older Americans.

OBJECTIVES Unsecured consumer debt may affect well-being negatively. We evaluated the association between unsecured debt and two distinct outcomes: depressive symptomatology and psychological well-being. METHOD Data were obtained from the 2006 Health and Retirement Study. There were 5,817 adults aged ≥ 51 who responded to a core survey and psychosocial leave-behind questionnaire. Depressive s...