Introduction / Edward L. Glaeser, Tano Santos, and E. Glen Weyl -- Stochastic compounding and uncertain valuation / Lars Peter Hansen and José A. Scheinkman -- The good banker / Patrick Bolton -- How to implement contingent capital / Albert S. Kyle -- Bankruptcy laws and collateral regulation:...

This paper presents a statistical and economic interpretation of the low and often economically implausible risk aversion estimates obtained for fixed income assets throughout the finance literature. For a statistical interpretation, Monte Carlo simulations are used to demonstrate that...