Digitisation processes have – often through disruptive innovations – injected additional competition in many markets, be it online retailing, new transport platforms, electronic banking and brokerage, online travel agencies or new media formats. At the same time, a number of companies,...

We study banks' incentive to pool assets of heterogeneous quality when investors evaluate pools by extrapolating from limited sampling. Pooling assets of heterogeneous quality induces dispersion in investors' valuations without affecting their average. Prices are determined by market clearing...