Correction for “Collateral premia and risk sharing under limited commitment” [Econ. Theory 46, 475–501 (2011)]

Weerachart Kilenthong

Economic Theory Bulletin, 2014, vol. 2, issue 1, No 11, 115-118

Abstract: Abstract This note provides a correction for Lemma 4 in Kilenthong (Econ Theory 46:475–501, 2011). As pointed out in Zierhut (Econ Theory Bull, 2013), Assumption 2 in Kilenthong (Econ Theory 46:475–501, 2011) is not sufficient to guarantee that optimal allocations will be full risk sharing as claimed in Lemma 4 in Kilenthong (Econ Theory 46:475–501, 2011). This note shows that the main result still holds for an economy in which risk sharing rule is linear by providing a corrected sufficient condition for full risk sharing.

Keywords: Collateral premium; Collateralized contracts; Limited commitment; Full risk sharing (search for similar items in EconPapers)
JEL-codes: D52 D53 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1007/s40505-013-0028-y

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