Abstracts of Working Papers in Economics

1990 Abstracts of Working Papers in Economics  
Asymmetric Information. Capital Markets. AB Projects with negative expected value cannot obtain financing in competitive capital markets if all potential investors are risk neutral and have identical beliefs about the distribution of the project's net revenue. We present a series of examples with heterogeneous beliefs in which it is possible for a project to obtain financing even though all investors in the project believe, conditional on the project being undertaken, that the project has a
more » ... tive expected value. An important feature of the examples is that the differences in beliefs are due only to differences in information, and are not simply arbitrary unexplained differences in opinions.
doi:10.1017/s0951007900001856 fatcat:3bkhrlvezrdkvcbukev3nl43sy