Guidolin, Massimo; Rinaldi, Francesca - 2009
populated by both standard expected utility maximizers and by ambiguity-averse investors that trade in the market for a risky … asset. We show that, provided there is a sufficient amount of ambiguity, market breakdowns where large portions of traders … to ambiguity. When we analyze the effect of policy actions, we find that when a market has fallen into a state of …