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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.

Suggested Citation

  • Sherrill Shaffer, 2011. "Strategic risk aversion," Applied Financial Economics, Taylor & Francis Journals, vol. 21(13), pages 949-956.
  • Handle: RePEc:taf:apfiec:v:21:y:2011:i:13:p:949-956
    DOI: 10.1080/09603107.2011.556587
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