Liquid bundles

Emmanuel Farhi and Jean Tirole

Journal of Economic Theory, 2015, vol. 158, issue PB, 634-655

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.

Keywords: Liquidity; Security design; Tranching; Information acquisition (search for similar items in EconPapers)
JEL-codes: D82 E51 G12 G14 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Liquid Bundles (2013)
Working Paper: Liquid Bundles (2013)
Working Paper: Liquid Bundles
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:158:y:2015:i:pb:p:634-655

DOI: 10.1016/j.jet.2014.09.002

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