Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/308424 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11528
Publisher: 
CESifo GmbH, Munich
Abstract: 
We compare Transparency and Privacy in credit markets. A long-lived borrower, who has a risky investment opportunity, seeks loans from a sequence of short-lived lenders. Under Transparency, all the information about the past investment outcomes is shared among the future lenders, which helps the lenders learn the borrower's type. In contrast, no information is shared under Privacy. We first show that under both Transparency and Privacy, the iterated elimination of dominated strategies leaves unique outcomes. We then show that trade stops earlier under Transparency than under Privacy. A higher social welfare is achieved under Privacy than under Transparency.
Subjects: 
credit market
transparency
privacy
strategic experimentation
JEL: 
C73
D83
G20
Document Type: 
Working Paper
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