Dynamic Risk Taking With Indivisible Risks
In this paper, we examine second-best efficient allocations of risk when some forms of incompleteness are introduced in risk- sharing contracts. In the first model, there are two independent sources of risk, but risk-sharing contracts can be made contingent to only one of the two sources. We examine the condition under which those who bear the non-transferable risk should bear relatively less of the transferable risk in the economy. Decreasing absolute prudence, i.e. -u'''/u'')'
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|Date of creation:||May 1994|
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- DREZE, Jacques & GOLLIER, Christian, .
"Risk sharing on the labour market and second-best wage rigidities,"
CORE Discussion Papers RP
1073, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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NBER Working Papers
2848, National Bureau of Economic Research, Inc.
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- Meade, James E, 1972. "The Theory of Labour-Managed Firms and of Profit Sharing," Economic Journal, Royal Economic Society, vol. 82(325), pages 402-28, Supplemen.
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