Cagetti, Marco; Hansen, Lars Peter; Sargent, Thomas; … - In: Review of Financial Studies 15 (2002) 2, pp. 363-404
We study how decision-makers' concerns about robustness affect prices and quantities in a stochastic growth model. In the model economy, growth rates in technology are altered by infrequent large shocks and continuous small shocks. An investor observes movements in the technology level but...