Mood Effects in Optimal Debt Contracts
University of Piraeus
University of Piraeus - Department of Banking and Financial Management
January 1, 2012
The impact of strong emotions or mood on decision making and risk taking is well recognized in behavioral economics and finance. Yet, and in spite of the immense interest, no study, so far, has provided any comprehensive evidence on the impact of such emotions on financial contracts and particularly on debt contracts. This paper provides the theoretical framework to study the impact of mood on financial contracting.
Number of Pages in PDF File: 31
Keywords: mood effects, rank-dependent probabilities
Date posted: February 5, 2012 ; Last revised: March 21, 2012
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