This paper studies how electoral incentives influence the outcomes of political negotiations. It considers a game between two political parties that have to bargain over which policy to implement. While bargaining, the parties' popularity varies over time. Changes in popularity are partly...

We study optimal security design when issuer and market participants disagree about the characteristics of the underlying asset. We show that pooling and tranching assets can be preferable to selling optimal securities backed by individual assets: pooling can be a response to belief disagreement...