On the Effect of Risk Aversion in Two-Person, Two-State Finance Economies
AbstractThe effect of replacing an agent in a two-person two-state finance economy by a more risk averse agent is studied. It is established under which conditions the other agent benefits or looses in equilibrium from dealing with a more risk averse agent. If one agent becomes more risk averse, then the equilibrium allocation moves towards that agent's certainty line. Whether or not that is beneficial for the other agent depends on the location of the endowment point.
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Bibliographic InfoArticle provided by De Gruyter in its journal The B.E. Journal of Theoretical Economics.
Volume (Year): 7 (2008)
Issue (Month): 1 (January)
Contact details of provider:
Web page: http://www.degruyter.com
Other versions of this item:
- Berden, Caroline & Peters, Hans, 2006. "On the effect of risk aversion in two-person, two-state finance economies," Research Memorandum 011, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
- D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Caroline Berden & Hans Peters, 2006.
"On the Effect of Risk Aversion in Bimatrix Games,"
Theory and Decision,
Springer, vol. 60(4), pages 359-370, 06.
- Kobberling, Veronika & Peters, Hans, 2003.
"The effect of decision weights in bargaining problems,"
Journal of Economic Theory,
Elsevier, vol. 110(1), pages 154-175, May.
- Peters,Hans & Köbberling,Vera, 2000. "The Effect of Decision Weights in Bargaining Problems," Research Memorandum 037, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
- LeRoy,Stephen F. & Werner,Jan, 2001. "Principles of Financial Economics," Cambridge Books, Cambridge University Press, number 9780521586054, April.
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