5 Appendix

fraction of impatient agents=0.1

7
risk sharing
6 level effect
growth effect
5

0
0.4 0.5 0.6 0.7 0.8 0.9 1

−2.7

−2.8
welfare

−2.9

−3

−3.1
0.4 0.5 0.6 0.7 0.8 0.9 1
fraction of unsophisticated agents

Figure 7. The case with a utility cost

39
 fraction of impatient agents=0.3
5
risk sharing
level effect
4 growth effect

0
0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1

−10

−10.5

−11
welfare

−11.5

−12

−12.5

−13
0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
fraction of unsophisticated agents

Figure 8. The case with a utility cost

40
 Long−term return=6
10
risk sharing
level effect
8 growth effect

0
0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1

−11.5

−12

−12.5
welfare

−13

−13.5

−14

−14.5

−15
0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
fraction of unsophisticated agents

Figure 9. The case with a utility cost

41
 Long−term return=2
3.5
risk sharing
3 level effect
growth effect
2.5

1.5

0.5
0.6 0.65 0.7 0.75 0.8 0.85 0.9 0.95 1

−2.5
welfare

−2.6

−2.7

−2.8
0.6 0.65 0.7 0.75 0.8 0.85 0.9 0.95 1
fraction of unsophisticated agents

Figure 10. The case with a utility cost

42
 fraction of impatient agents=0.1
7
risk sharing
6 level effect
growth effect
5

0
0.4 0.5 0.6 0.7 0.8 0.9 1

−2.4

−2.6
welfare

−2.8

−3

−3.2
0.4 0.5 0.6 0.7 0.8 0.9 1
fraction of unsophisticated agents

Figure 11. The case with a resource cost

43
 fraction of impatient agents=0.3
5
risk sharing
level effect
4 growth effect

0
0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1

−9.5

−10

−10.5
welfare

−11

−11.5

−12
0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1
fraction of unsophisticated agents

Figure 12. The case with a resource cost

44
 Long−term return=6
10
risk sharing
level effect
8 growth effect

0
0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1

−12

−13
welfare

−14

−15

−16
0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
fraction of unsophisticated agents

Figure 13. The case with a resource cost

45
 Long−term return=2
3.5
risk sharing
3 level effect
growth effect
2.5

1.5

0.5
0.6 0.65 0.7 0.75 0.8 0.85 0.9 0.95 1

−2.5

−2.6
welfare

−2.7

−2.8

−2.9
0.6 0.65 0.7 0.75 0.8 0.85 0.9 0.95 1
fraction of unsophisticated agents

Figure 14. The case with a resource cost

46