Welfare Implications of Mitigating Investment Uncertainty
2018
This paper explores the welfare implications of mitigating investment uncertainty in the context of Easley and O fHara (2009) [Ambiguity and Nonparticipation: The Role of Regulation. Review of Financial Studies 22(5), 1817-1843]. While one may expect welfare gains to be had by encouraging participation in financial markets by ambiguity-averse investors, we formally show that it hurts other investors and is not Pareto-improving without appropriate income transfers.
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