Optimal Information and Security Design
Speaker: Dr Nicolas Inostroza
Affiliation: University of Toronto
Location: Online via Zoom
Zoom link: https://uqz.zoom.us/j/82603079317
Abstract:
An asset owner designs an asset-backed security and a signal about its value. After privately observing the signal, he sells the security to a monopolistic liquidity supplier. Any optimal signal distribution guarantees the security sale and reveals noisy information about high valuations of the security. The optimal security is pure equity –the most informationally sensitive security. It is risky debt under external liquidity requirements akin to regulatory requirements on banks, pension funds, insurance companies. Thus, the “folk intuition” behind debt optimality as the least informationally sensitive security holds only under additional restrictions (e.g., regulatory) on security or information design.
About the presenter:
If you would like to meet with Dr Inostroza, please contact Dr Carlos Oyarzun
About Economic Theory Seminar Series
A seminar series designed specifically for economic theory researchers to network and collaborate.
