Optimal Lending Contracts with Retrospective and Prospective Bias

J. Bohren, Daniel N. Hauser
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Abstract

Model misspecification is a common approach to model belief formation distortions. Misspecified models can be decomposed into two classes of distortions: prospective and retrospective biases (Bohren and Hauser 2023). Prospective biases correspond to distortions in forecasting future beliefs, while retrospective biases correspond to distortions in interpreting information ex post. We disentangle the impact of these two distortions on optimal lending contracts in the context of an entrepreneur who borrows to invest in a project. The entrepreneur learns about project quality from a signal, which she interprets with a misspecified model. A lender leverages each form of bias in distinct ways.
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具有回顾性和前瞻性偏差的最优贷款合同
模型错配是造成信念形成扭曲的常见方法。错误指定的模型可以分解为两类扭曲:前瞻性和回顾性偏差(Bohren和Hauser 2023)。前瞻性偏差对应于预测未来信念的扭曲,而回顾性偏差对应于事后解释信息的扭曲。我们在企业家借钱投资项目的背景下,理清了这两种扭曲对最优贷款合同的影响。企业家从一个信号中了解项目质量,她用一个错误的模型来解释这个信号。贷款人以不同的方式利用每种形式的偏见。
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