Lecture 9: Risk-Sharing with Production
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MIT 14.04 Intermediate Microeconomic Theory, Fall 2020Instructor: Prof. Robert TownsendUploaded 31-08-22View the complete course: https://ocw.mit.edu/courses/14-04-intermediate-microeconomic-theory-fall-2020/YouTube Playlist: https://www.youtube.com/watch?v=XSTSfCs74bg&list=PLUl4u3cNGP63wnrKge9vllow3Y2OOOKqFIn 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.License: Creative Commons BY-NC-SAMore information at https://ocw.mit.edu/termsMore courses at https://ocw.mit.eduSupport OCW at http://ow.ly/a1If50zVRlQWe encourage constructive comments and discussion on OCW’s YouTube and other social media channels. Personal attacks, hate speech, trolling, and inappropriate comments are not allowed and may be removed. More details at https://ocw.mit.edu/comments.
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