Abstract

Citations (2)

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Risk and Evolution

Ted To
Bureau of Labor Statistics

Economic Theory, Vol. 13, Iss. 2, February 1999

Abstract:
I examine a Knightian (1921) model of risk using a general equilibrium model of investment and trade. A population of agents with various preference types can choose between a safe production technology and a risky production technology. In addition, the distribution of types of agents changes through a standard evolutionary dynamic. For a given population distribution, the equilibrium is in general inefficient, however, by allowing the population distribution to change in response to market generated rewards, the population will converge to one where the equilibrium is efficient and where the population as a whole behaves as if all agents were risk neutral.

JEL Classifications: C72, D81

Accepted Paper Series

Date posted: April 20, 1999 ; Last revised: April 20, 1999

Suggested Citation

To, Ted, Risk and Evolution. Economic Theory, Vol. 13, Iss. 2, February 1999. Available at SSRN: http://ssrn.com/abstract=151463

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Contact Information

Ted To (Contact Author)

Bureau of Labor Statistics ( email )

2 Massachusetts Avenue, NE
Room 3105
Washington, DC 20212
United States
202-691-6590 (Phone)
202-691-6583 (Fax)