Allocation of Aggregate and Individual Risks through Financial Markets

Michael J. P. Magill and Wayne J. Shafer

Chapter 7 in Equilibrium and Dynamics, 1992, pp 148-178 from Palgrave Macmillan

Abstract: Abstract This study presents a pure exchange model of an economy with aggregate and individual risks. Aggregate risks have the property that they directly affect the preferences and endowments of all agents simultaneously. Individual risks have the property that they affect the preferences and endowments of particular individual agents independently, and thus their effects cancel out at the aggregate due to the operation of the law of large numbers.

Keywords: Individual Risk; Future Market; Market Equilibrium; Price System; Future Price (search for similar items in EconPapers)
Date: 1992
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DOI: 10.1007/978-1-349-11696-6_7

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