Journal Article Stability of Separable Hamiltonians and Investment Theory Get access José Alexandre Scheinkman José Alexandre Scheinkman University of Chicago Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 45, Issue 3, October 1978, Pages 559–570, https://doi.org/10.2307/2297257 Published: 01 October 1978 Article history Received: 01 November 1976 Accepted: 01 October 1977 Published: 01 October 1978

Does competition among financial intermediaries lead to excessively low standards? To examine this question, we construct a model where intermediaries design contracts to attract trading volume, taking into consideration that traders differ in credit quality and may default. When credit quality is observable, intermediaries demand the “right” amount of guarantees. A monopolist would demand fewer guarantees. Private information about credit quality has an ambiguous effect in a competitive environment. When the cost of default is large (small), private information leads to higher (lower) standards. We exhibit examples where private information is present and competition produces higher standards than monopoly does.

This paper treats dynamic optimization problems from the point of view of programming in infinite dimensional spaces. Sufficient conditions (of a dominant diagonal nature) for smooth dependence of optimal paths on initial conditions and other parameters are given. It is also shown that the smooth dependence and the so called are very closely related. This relationship is used to prove a turnpike theorem for a model that may be interpreted as a multisectoral model of optimal growth with positive discounting and to show that the turnpike property is kept under small perturbations.

We propose an origination-and-contingent-distribution model of banking, in which liquidity demand by short-term investors (banks) can be met with cash reserves (inside liquidity) or sales of assets (outside liquidity) to long-term investors (hedge funds and pension funds). Outside liquidity is a more efficient source, but asymmetric information about asset quality can introduce a friction in the form of excessively early asset trading in anticipation of a liquidity shock, excessively high cash reserves, and too little origination of assets by banks. The model captures key elements of the financial crisis and yields novel policy prescriptions.

The high variance of crime rates across time and space is one of the oldest puzzles in the social sciences; this variance appears too high to be explained by changes in the exogenous costs and benefits of crime. We present a model where social interactions create enough covariance across individuals to explain the high cross-city variance of crime rates. This model provides an index of social interac-tions which suggests that the amount of social interactions is highest in petty crimes, moderate in more serious crimes, and almost negligible in murder and rape. Quelquefois aussi le crime prend sa source dans l'esprit d'imitation, que l'homme possede 'a un haut degre et qu'il manifeste en toutes choses [A. Quetelet 1835]. I.