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Ambiguity aversion and the absence of indexed debt

Abstract:

If agent's (subjective) beliefs are ambiguous then the beliefs may not be represented by a unique probability distribution in the standard Bayesian fashion but instead by a set of probabilities. Roughly put, an ambiguity averse decision maker evaluates an act by the minimum expected value that may be associated with it. In spite of wide and long-standing support among economists for indexation of loan contracts there has been relatively little use of indexation, except in situations of extrem...

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Publication status:
Published

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Publisher:
University of Oxford
Series:
Department of Economics Discussion Paper Series
Publication date:
2000-10-01
Paper number:
28
Keywords:
Pubs id:
451779
Local pid:
pubs:451779
Deposit date:
2020-12-14

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