Exchanges and measures of risks |
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Authors: | Sjur Didrik Fl?m |
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Institution: | 1. Department of Economics, University of Bergen, 5007, Bergen, Norway
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Abstract: | When investors or reinsurers measure economic risk in monetary terms, they operate as though utility were transferable. A
main purpose of this paper is to show that transferability largely facilitates attainment, analysis, computation and modelling
of equilibrium in exchange economies. To wit, under reasonable and weak assumptions, it is shown that duality delivers an
equilibrium price, and that simple bilateral barters may ensure market clearing. If, however, underlying beliefs about future
states are strictly incompatible, equilibrium cannot generally exist. |
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Keywords: | |
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