Liquid bundles

Emmanuel Farhi, Jean Tirole*

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    7 Scopus citations

    Abstract

    Parties in financial markets, industries, compensation design or politics may negotiate on either a piecemeal or a bundled basis. Little is known about the desirability of bundling when values are common and/or information endogenous. The paper shows that bundling encourages information-equalizing investments, thereby facilitating trade. It accordingly revisits and qualifies existing knowledge on security design.

    Original languageEnglish (US)
    Pages (from-to)634-655
    Number of pages22
    JournalJournal of Economic Theory
    Volume158
    Issue numberPB
    DOIs
    StatePublished - Jul 1 2015

    Keywords

    • Information acquisition
    • Liquidity
    • Security design
    • Tranching

    ASJC Scopus subject areas

    • Economics and Econometrics

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