14.04 | Fall 2020 | Undergraduate

Intermediate Microeconomic Theory

Lecture 9: Risk-Sharing with Production

In modern economies with financial markets, a good stock is one that hedges aggregate risk, having high return when the rest of the market does poorly, on average. A stock which in contrast co-moves with the market bears a risk premium, to compensate for its failure to hedge market risk. In Thai village economies, no stocks are traded, and yet amazingly, the returns on real capital assets, from running small business and farms, are consistent with the theory.

Course Info

Departments
As Taught In
Fall 2020
Learning Resource Types
Exams with Solutions
Lecture Videos
Readings
Problem Sets