TY - CONF T1 - A Signaling-Screening Equilibrium in the Mortgage Market T2 - 8th European Real Estate Society Conference Y1 - 2001 A1 - Ben-Shahar, Danny A1 - Feldman, David AB - Screening equilibria, mainly those a la Rothchild-Stiglitz(1976), have been widely used to explain various aspects of mortgage contracting. In the real world, however, most mortghage contracting processes involve both signalling and screening. In this paper, we combine signalling and screening mechanisms to examine a mortgage selection process. Borrowers ìbuyî different credit histories, signalling their default risk type to lenders. Credit histories, however, are imperfect signals and only partially separate borrowersí risk types, clustering them into subsets. Then, lenders screen each subset by offering a different menu. In equilibrium, safer (riskier) borrowers maintain a better (worse) credit record and choose shorter (longer) matutity and lower (higher) risk premium mortgage loan contracts. We further show that the separating signalling-screening equilibrium is Pareto superior to a corresponding screening equilibrium. JA - 8th European Real Estate Society Conference T3 - ERES: Conference CY - Alicante, Spain U3 - RePEc:arz:wpaper:eres2001_117 J1 - Conference 2001 ID - oai:eres.id:eres2001_117 M3 - 10.15396/eres2001_117 ER -