The paper reports the result of an experimental game on asset integration and risk taking. We find evidence that … winnings in earlier rounds affect risk taking in subsequent rounds, but no evidence that real life wealth outside the … experiment affects risk taking. We find some evidence of imitation of the risk taking behavior of others that is distinct from …

We examine a simple measure of portfolio performance based on prospect theory, which captures not only risk and return … but also reflects differential aversion to upside and downside risk. The measure we propose is a ratio of gains to losses …, with the gains and losses weighted (if desired) to reflect risk-aversion for gains and risk-seeking for losses. It can also …

incomes fall short of their aspirations. Such people feel propelled to reach their aspirations by taking risk and willing to … aspirations. We find that people whose aspirations exceed their income are less risk-averse and less loss-averse than people whose … incomes exceed their aspirations. We also find that competitive and status-seeking people are less risk-averse than people who …

The paper studies risk mitigation associated with capital regulation, in a context where banks may choose tail risk … assets. We show that this undermines the traditional result that higher capital reduces excess risk-taking driven by limited … liability. Moreover, higher capital may have an unintended e¤ect of enabling banks to take more tail risk without the fear of …

assess and price the risk of default. In order to analyse default risk in the macroeconomy, a simple general equilibrium … model with banks and financial intermediation is constructed in which default-risk can be priced. It is shown how the credit … spread can be attributed largely to the risk of default and how excess loan creation may emerge due different attitudes to …

to these scenarios affect the upside and downside risks embodied in the baseline real-time oil price forecast. Such risk …