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Risk Aversion in a Dynamic Trading Game

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  • Karp, Larry S.

Abstract

The effect of risk aversion on Nash equilibrium trade restrictions is studied using numerical methods. An increase in a nation's level of risk aversion can lead to either an increase or decrease in its equilibrium restriction and either an increase or decrease in its rival's restriction. The linear quadratic dynamic game is generalized to include risk aversion.

Suggested Citation

  • Karp, Larry S., 1986. "Risk Aversion in a Dynamic Trading Game," Working Papers 51231, International Agricultural Trade Research Consortium.
    • Handle: RePEc:ags:iatrwp:51231
    DOI: 10.22004/ag.econ.51231
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    References listed on IDEAS

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    1. John Laitner, 1980. ""Rational" Duopoly Equilibria," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 95(4), pages 641-662.
    2. Martin K. Perry, 1982. "Oligopoly and Consistent Conjectural Variations," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 197-205, Spring.
    3. Jorgensen, Steffen, 1982. "A survey of some differential games in advertising," Journal of Economic Dynamics and Control, Elsevier, vol. 4(1), pages 341-369, November.
    4. Joel Sobel, 1985. "A Theory of Credibility," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(4), pages 557-573.
    5. Bresnahan, Timothy F, 1981. "Duopoly Models with Consistent Conjectures," American Economic Review, American Economic Association, vol. 71(5), pages 934-945, December.
    6. Larry S. Karp & Alex F. McCalla, 1983. "Dynamic Games and International Trade: An Application to the World Corn Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(4), pages 641-650.
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    International Relations/Trade;

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