We examine asset prices in a representative-agent model of general equilibrium. Assuming only that individuals are risk … averse, we determine conditions on the changes in asset risk that are both necessary and sufficient for the asset price to … incomplete in the sense of containing an uninsurable background risk, such as a risk on labor income. We extend our model to show …

We use perturbation methods to derive a rule for the optimal risk-adjusted social cost of carbon (SCC) that … different aversions to risk and intertemporal fluctuations, convex damages, uncertainties in economic growth, atmospheric carbon …-run climate feedbacks. Our non-certainty-equivalent rule for the SCC incorporates precaution, risk insurance, and climate …

Lorenz dominance is characterized by this property and discuss the implications of these results for choice under risk. …

the impact of the recent reform on allowance prices. By including bounded rationality such as myopia or hedging …-ante in the decision making of the firms. Myopia and hedging requirements have little impact in the prereform market but … strongly drive market outcomes after the reform. In the post-reform market, hedging requirements in combination with …

matter of course that economics should become a natural science. Such a characterization misses an essential aspect of a …

this uncertainty cost? Is there a hedging strategy that decision makers can adopt to cope with delayed action and uncertain … costs of ambitious climate policies. They also indicate that there is an effective hedging strategy that could minimise the …

. This correlation exposes managers to risk and hence gives them an incentive to hedge against the poor performance of their … using financial markets and shareholders cannot perfectly monitor the managers̕ portfolio in order to keep him from hedging … the risk in his compensation. In particular, shareholders can monitor the managers̕ portfolio stochastically, and since …

bond positions, which creates a net hedging demand for dollar assets that depreciates USD rates in both the forward and … spot markets. We document the time-varying nature of this net hedging demand and show how it relates to eco … FX hedging pressure can account for approximately 30% of all monthly variation in the seven most important dollar …

This article studies the effects of tax competition on the provision of public goods under business risk and partial …

ability distribution, may be provided by behavioural economics. We present a prototypical model where individuals who are … explore the design of policy. The model highlights the critical roles played by (i) the relationship between behavioural risk … preferences, standard risk aversion and labour supply behaviour, (ii) the risk properties of education, and (iii) the degree of …