Knightian uncertainty and moral hazard
β 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
No coin nor oath required. For personal study only.
π SIMILAR VOLUMES
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
## 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