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Risk Aversion in a Dynamic Trading Game

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  • Karp, Larry

Abstract

The effect of risk aversion on Nash equilibrium trade restrictions is studied using numerical methods. An increase in a nation's level of risk aversion can lead to either an increase or decrease in its equilibrium restriction and either an increase or decrease in its rival's restriction. The linear quadratic dynamic game is generalized to include risk aversion.

Suggested Citation

  • Karp, Larry, 1986. "Risk Aversion in a Dynamic Trading Game," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt5tm7k8ss, Department of Agricultural & Resource Economics, UC Berkeley.
    • Handle: RePEc:cdl:agrebk:qt5tm7k8ss
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    References listed on IDEAS

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    1. Jorgensen, Steffen, 1982. "A survey of some differential games in advertising," Journal of Economic Dynamics and Control, Elsevier, vol. 4(1), pages 341-369, November.
    2. Martin K. Perry, 1982. "Oligopoly and Consistent Conjectural Variations," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 197-205, Spring.
    3. Joel Sobel, 1985. "A Theory of Credibility," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(4), pages 557-573.
    4. Bresnahan, Timothy F, 1981. "Duopoly Models with Consistent Conjectures," American Economic Review, American Economic Association, vol. 71(5), pages 934-945, December.
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    Keywords

    future trading; game theory;

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