Bargaining over a Non-Standardized Asset

81 Pages Posted: 2 Dec 2015 Last revised: 14 Jun 2019

See all articles by Anton Tsoy

Anton Tsoy

University of Toronto - Department of Economics

Date Written: June 13, 2019


Assets range in the degree of standardization from less standardized real estate or municipal bonds to more standardized futures or Treasuries. I study bargaining over a non-standardized asset between sophisticated investors who possess precise private information about its value to parties. The degree of standardization reflects how accurately public information captures all relevant information about the asset value. I show that bargaining delays are generally positive and hump-shaped in values. When the trade is intermediated by a broker-dealer, the trade is efficient and the bid-ask spread is hump-shaped in values. Greater asset standardization normally reduces bargaining delays and bid-ask spreads.

Keywords: bargaining delay, bid-ask spread, affiliated values, lack of common knowledge, standardized assets, negotiation, public information, credit ratings

JEL Classification: G1, D82, C78

Suggested Citation

Tsoy, Anton, Bargaining over a Non-Standardized Asset (June 13, 2019). Available at SSRN: or

Anton Tsoy (Contact Author)

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S3G7

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