[Update] You can find here an alternative simulation for an unstable model in the presence of outliers.

This topic has been widely discussed both on this site, and in scientific literature, with conflicting views, intuitions and conclusions. Back in 2013 when this question was first asked, the dominant view was that LOOCV leads to larger variance of the expected generalization error of a training algorithm producing models out of samples of size $n(K−1)/K$.

This papers is often refered to as the source for the argument that LOOC has higher variance. In section 1:

The authors take a strong view on this topic and clearly state section 7.1

This topic has been widely discussed both on this site, and in the scientific literature, with conflicting views, intuitions and conclusions. Back in 2013 when this question was first asked, the dominant view was that LOOCV leads to larger variance of the expected generalization error of a training algorithm producing models out of samples of size $n(K−1)/K$.

This paper is often refered to as the source for the argument that LOOC has higher variance. In section 1:

The authors take a strong view on this topic and clearly state in Section 7.1

A summary of recent posts and debates (July 2018)

[TL:DR] A summary of recent posts and debates (July 2018)