This paper formalizes the idea that more hedging instruments may destabilize markets when traders are heterogeneous and …

We develop a novel argument why better public information can help countries to insure against idiosyncratic risk … and engage in risk-sharing contracts with limited enforceability. Better public information has two opposite effects …. First, it has a detrimental effect on risk sharing by limiting risk-sharing possibilities as emphasized by Hirshleifer (1971 …

incomplete markets model and find that advance information reduces households' income forecast errors by 15%. Our estimation …

definitions of complete and incomplete markets. In this constrained set-up,two threshold values with familiar properties arise ….The case of a zero short-sale bound set on some security fulfills the standard definition ofincomplete financial markets … active.For intermediate bounds the distinction between complete and incomplete financial markets isblurred. Although some …

over-confidence. To explain this evidence, we develop and structurally estimate a standard-incomplete markets model in … significantly lower than what is typically assumed in incomplete markets models. Facing lower earnings uncertainty, households …

-incomplete markets model in which rational households possess private advance information on their future earnings. We find that …

(2) and (3). Mispricing is therefore a robust finding in markets with positive expectation feedback. Some very large …