Search Results
Working Paper
Civil Liberties and Social Structure
Governments use coercion to aggregate distributed information relevant to governmental objectives—from the prosecution of regime-stability threats to terrorism or epidemics. A cohesive social structure facilitates this task, as reliable information will often come from friends and acquaintances. A cohesive citizenry can more easily exercise collective action to resist such intrusions, however. We present an equilibrium theory where this tension mediates the joint determination of social structure and civil liberties. We show that segregation and unequal treatment sustain each other as ...
Working Paper
Building Credit Histories
This paper investigates how new borrowers expand their credit access. In particular, we examine the role that consumers’ credit choices, not just repayment behavior, play in building their credit histories. Using credit bureau data, we document that incumbent lenders typically increase credit limits for borrowers who open additional credit cards. This effect is especially pronounced for new borrowers. Our interpretation of this evidence is that lenders perceive credit offered by other lenders as revealing favorable information about the borrower. We build a novel model consistent with this ...
Working Paper
Building Credit History with Heterogeneously Informed Lenders
This paper examines a novel mechanism of credit-history building as a way of aggregating information across multiple lenders. We build a dynamic model with multiple competing lenders, who have heterogeneous private information about a consumer's creditworthiness, and extend credit over multiple stages. Acquiring a loan at an early stage serves as a positive signal | it allows the borrower to convey to other lenders the existence of a positively informed lender (advancing that early loan) | thereby convincing other lenders to extend further credit in future stages. This signaling may be costly ...