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Title: Noisy Learning in a Competitive Market with Risk Aversion
Authors: Mirman, Leonard J.
Salgueiro, Egas M.
Santugini, Marc
Keywords: Learning
Risk aversion
Issue Date: 2014-02
Series/Report no.: Cahiers du CIRPÉE;15-02
Abstract: We address the issue of risk aversion in a competitive equilibrium when some buyers engage in learning and information is conveyed through the price system. Specifically, since the learning process yields uncertainty, we study the effect of risk aversion on the equilibrium outcomes of the model, including the amount of information released by the market. We show that risk aversion has an effect on the market outcomes but not on the flow of information. In particular, an increase in risk aversion lowers the competitive price and quantity. However, an increase in risk aversion does not change the amount of information embedded in the equilibrium price.
Appears in Collections:Cahiers de recherche du CIRPÉE

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