posteriori optimism. This paper finds that financial optimism has a significant positive effect on risk taking behaviour …. Optimistic investors choose risky portfolios over risk-free portfolios for their investments and have higher personal debt …

correlation between pessimism (respectively doubt) and risk tolerance. Under reasonable assumptions, beliefs exhibit a pessimistic … bias and, as a consequence, the risk premium is higher than in a standard setting. …

A theory of individual decision and a general equilibrium theory in complete markets are provided, for the case of … utility indices.SSD is also used to give microfoundations to law-invariant risk measures. …

the risk that can be diversified. Not surprisingly, simple examples show that this approach is typically inconsistent for … risk adverse agents. We show that it can nevertheless be recovered asymptotically when the number of sold claims goes to … infinity and the absolute risk aversion of the agent goes to zero simultaneously. This follows from a general convergence …

bias on the financial markets equilibrium risk premium. …

heterogeneity. Investors may differ in their beliefs, in their level of risk aversion and in their time preference rate. We study … shares, the market price of risk, the risk free rate, the bond prices at dierent maturities, the stock price and volatility …

minimal initial capital needed to hedge, without risk, European-type contingent claims. We prove that the value of this …