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Welfare Implications of Mitigating Investment Uncertainty

Author

Listed:
  • Takayuki Ogawa

    (Faculty of Economics, Osaka University of Economics)

  • Jun Sakamoto

    (Graduate School of Economics, Osaka University)

Abstract

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.

Suggested Citation

  • Takayuki Ogawa & Jun Sakamoto, 2018. "Welfare Implications of Mitigating Investment Uncertainty," Discussion Papers in Economics and Business 18-33-Rev., Osaka University, Graduate School of Economics, revised Dec 2018.
    • Handle: RePEc:osk:wpaper:1833r
    as

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    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/1833R.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Ambiguity; Heterogenous agents; Uncertainty; Welfare effects;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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