The book-building procedure for selling initial public offerings to investors has captured significant market share from auction alternatives in recent years, despite significantly lower costs in both direct fees and initial underpricing when using the auction mechanism. This paper shows that in...

We present a standard model of financial innovation, in which intermediaries engineer securities with cash flows that investors seek, but modify two assumptions. First, investors (and possibly intermediaries) neglect certain unlikely risks. Second, investors demand securities with safe cash...

We introduce two pieces of information, denoted memes, into a diffusion process in which memes are transmitted when individuals meet and forgotten at an exogenous rate. At most one meme can be transmitted at a meeting, which introduces opportunity costs in the process. Individuals differ...