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Harsh default penalties lead to Ponzi schemes
M.R. Páscoa,
Published in
2009
Volume: 65
   
Issue: 1
Pages: 270 - 286
Abstract
In the presence of utility penalties, collateral requirements do not always eliminate the occurrence of Ponzi schemes. Harsh utility penalties may induce effective payments over collateral recollection values. In this event, loans can be larger than collateral costs and Ponzi schemes become possible. © 2007.
About the journal
JournalGames and Economic Behavior
ISSN08998256