Economics, Econometrics and Finance
8 years ago

Risk aversion lowers prices in competitive markets without affecting information flow.

SSRN Electronic Journal
Noisy Learning in a Competitive Market with Risk Aversion
Leonard J. Mirman, Egas M. Salgueiro, Marc Santugini

Paper Summary

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Risk aversion affects market outcomes but not the flow of information in a competitive market. More risk aversion leads to lower prices and quantities in the market, but it doesn't change the amount of information in the prices.