superior. The intuition is simple: if underlying technologies are not convex, then risk-sharing can lower expected utility. The … simplistic models arguing for financial integration typically employed in economics assume convexity; but the world is rife with … likelihood of a bankruptcy cascade, "contagion," and systemic risk …

superior. The intuition is simple: if underlying technologies are not convex, then risk-sharing can lower expected utility. The … simplistic models arguing for financial integration typically employed in economics assume convexity; but the world is rife with … likelihood of a bankruptcy cascade, "contagion," and systemic risk …

The concentration of risk within the financial system leads to systemic instability. We propose a theory to explain the … structure of the financial system and show how it alters the risk taking incentives of financial institutions when the … interconnected to fail. This concentrated structure enables institutions to share the risk of systemic crises in a privately optimal …

network of liabilities among agents. The average level of risk diversification of the agents coincides with the density of … diversification of risk always leads to a more stable financial system, in our model a tension emerges between individual risk and … systemic risk. As the number of counterparties in the credit network increases beyond a certain value, the default probability …

network of liabilities among agents. The average level of risk diversification of the agents coincides with the density of … diversification of risk always leads to a more stable financial system, in our model a tension emerges between individual risk and … systemic risk. As the number of counterparties in the credit network increases beyond a certain value, the default probability …

superior. The intuition is simple: if underlying technologies are not convex, then risk-sharing can lower expected utility. The … simplistic models arguing for financial integration typically employed in economics assume convexity; but the world is rife with … likelihood of a bankruptcy cascade, "contagion," and systemic risk"--National Bureau of Economic Research web site …