Risk sharing in an asymmetric environment

• Main Authors: FESSELMEYER, Eric, MIRMAN, Leonard J., SANTUGINI, Marc
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2014
• Subjects: Asymmetric options; Financial markets; Risk sharing; Risky project; Entrepreneurial and Small Business Operations; Finance and Financial Management
• Online Access: https://ink.library.smu.edu.sg/cis_research/6; https://ink.library.smu.edu.sg/context/cis_research/article/1005/viewcontent/1_s2.0_S1059056014000811_main.pdf
• Institution: Singapore Management University

We study the effect of an asymmetric environment on risk sharing. In our model, entrepreneurs consider undertaking risky projects in the real sector as well as selling part of their projects to investors. To capture the idea of an asymmetric environment, the returns on the alternative risk-free inve...