Liquid Bundles
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.
Authors: | Farhi, Emmanuel ; Tirole, Jean |
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Institutions: | Institute for Quantitative Social Science, Harvard University |
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