Liquid Bundles


Farhi, Emmanuel, and Jean Tirole. 2015. “Liquid Bundles.” Journal of Economic Theory 158: 634-655.
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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.

Last updated on 03/04/2016