Gaballo, Gaetano; Ordoñez, Guillermo - National Bureau of Economic Research - 2021
In absence of insurance contracts to share risk, public information is a double-edged sword. On the one hand, it … common knowledge of shocks restricts trading risk. We embody these two faces of information in a single general …-equilibrium model. We characterize the conditions under which market-insurance is superior, and then public information - even though …