This article introduces Knightian uncertainty into the production and futures hedging framework. The firm has imprecise information about the probability density function of spot or futures prices in the future. Decision-making under such scenario follows the "max-min" principle. It is shown that in
Knightian uncertainty and insurance regulation decision
β Scribed by Chen, An ;Su, Xia
- Publisher
- Springer
- Year
- 2009
- Weight
- 311 KB
- Volume
- 32
- Category
- Article
- ISSN
- 1127-1035
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## Abstract This paper examines the effects of Knightian uncertainty on a commodity futures market within the NewberyβStiglitz framework. It is shown that Knightian traders act more conservatively. In a partial trade equilibrium, risk aversion and Knightian uncertainty have qualitatively similar ef
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