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Knightian uncertainty and moral hazard

✍ Scribed by Giuseppe Lopomo; Luca Rigotti; Chris Shannon


Book ID
113708294
Publisher
Elsevier Science
Year
2011
Tongue
English
Weight
262 KB
Volume
146
Category
Article
ISSN
0022-0531

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## Abstract This paper examines the effects of Knightian uncertainty on a commodity futures market within the Newbery‐Stiglitz framework. It is shown that Knightian traders act more conservatively. In a partial trade equilibrium, risk aversion and Knightian uncertainty have qualitatively similar ef