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Strategic risk aversion

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  • Sherrill Shaffer

Abstract

This article demonstrates that exaggerated risk aversion may comprise a rational form of strategic behaviour in the face of asymmetric information. Unlike some other forms of strategic behaviour analysed previously, this behaviour confers a benefit in the form of higher ex post consumption (not merely higher expected consumption or expected utility) and whether or not markets are perfectly competitive.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/09603107.2011.556587
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Financial Economics.

Volume (Year): 21 (2011)
Issue (Month): 13 ()
Pages: 949-956

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Handle: RePEc:taf:apfiec:v:21:y:2011:i:13:p:949-956

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Related research

Keywords: strategic behaviour; risk aversion; contingent claims; asymmetric information;

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