eprintid: 32834
rev_number: 12
eprint_status: archive
userid: 1482
importid: 105
dir: disk0/00/03/28/34
datestamp: 2019-10-10 08:46:03
lastmod: 2021-03-13 12:38:26
status_changed: 2020-04-09 14:41:33
type: monograph
metadata_visibility: no_search
creators_name: Bianchi, Milo
creators_name: Jehiel, Philippe
creators_affiliation: Toulouse School of Economics
title: Bundlers Dilemmas in Financial Markets with Sampling Investors
ispublished: pub
subjects: subjects_ECO
abstract: 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 assuming that investors cannot borrow nor short-sell. A monopolistic bank has the incentive to create heterogeneous bundles only when investors have
enough money. When the number of banks is sufficiently large, oligopolistic banks choose extremely heterogeneous bundles, even when investors have little money and even if this turns out to be collectively detrimental to the banks. If in addition banks can originate low quality assets, even at a cost, this collective inefficiency is exacerbated and pure welfare losses arise. Robustness to the presence of rational investors and to the possibility of short-selling is discussed.
date: 2019-10
date_type: published
publisher: TSE Working Paper
official_url: https://www.tse-fr.eu/sites/default/files/TSE/documents/doc/wp/2019/wp_tse_1042.pdf
faculty: tse
divisions: tse
keywords: complex nancial products
keywords: bounded rationality
keywords: disagreement
keywords: market e¢ ciency
keywords: sampling
language: en
has_fulltext: TRUE
view_date_year: 2019
full_text_status: public
monograph_type: working_paper
series: TSE Working Paper
volume: 19-1042
place_of_pub: Toulouse
pages: 48
institution: Université Toulouse 1 Capitole
department: Toulouse School of Economics
book_title: TSE Working Paper
oai_identifier: oai:tse-fr.eu:123622
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oai_lastmod: 2020-01-31T13:01:45Z
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citation:   Bianchi, Milo and Jehiel, Philippe  (2019) Bundlers Dilemmas in Financial Markets with Sampling Investors.  TSE Working Paper, n. 19-1042, Toulouse     
document_url: https://publications.ut-capitole.fr/id/eprint/32834/1/wp_tse_1042.pdf