Search Theory in Financial Markets
نویسنده
چکیده
1. First, a number of financial markets—often called over-the-counter or “OTC” markets—are actually best described by a typical search and bargaining model; in these markets, investors have to locate a counterparty themselves, and once they find a suitable trading partner the two are free to trade at any mutually agreeable price. Hence, these models represent the most natural framework to study prices and allocations in OTC markets, and how they depend on the level of frictions in the environment.
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