Emmanuel Farhi, and Jean Tirole, “Liquid Bundles”, Journal of Economic Theory, vol. 158, July 2015, pp. 634–655.
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.
Asymmetric and Private Information • Mechanism DesignE51:
Money Supply • Credit • Money MultipliersG12:
Asset Pricing • Trading Volume • Bond Interest RatesG14:
Information and Market Efficiency • Event Studies • Insider Trading
Emmanuel Farhi, and Jean Tirole, “Liquid Bundles”, TSE Working Paper, n. 12-328, July 2012, revised October 2013.