Firms hiring fresh graduates face uncertainty on the future productivity of workers. Theory suggests that starting … wages reflect this, with lower pay for greater uncertainty. We use the dispersion of exam grades within a field of education … as an indicator of the unobserved heterogeneity that employers face. We find solid evidence that starting wages are lower …

We study the optimal taxation of risk-free and excess capital income with heterogeneous rates of return, alongside an … optimal nonlinear earnings tax. Households can hold three assets: one risk-free, one risky but diversifiable, and one a … private investment with idiosyncratic risk whose expected return differs among households. Contrary to expectations, the …

We investigate the major choice of college graduates where we make choice dependent on expected initial wages and … expected real wage growth and expected initial wages across majors. Furthermore, the differences in these expectations appear …

paperinclude prospect theory, the Allais paradox, the computation ofinherent reward and risk, the mean-variance CAPM, and … paradigmassumes that any investment strategy has its own "inherent reward" and "inherent risk" that can be judged with common sense …. Ijustify axiomatically the existence and uniqueness (ratio scale)of inherent reward (U) and inherent risk (D) that could …

This paper applies the dichotomous theory of choice by Zou (2000a) tothe analysis of investmentstrategies and security …

Empirical measures of world consumption growth risk have failed to rationalize the cross-section of country equity … returns. We propose a new factor, termed "the global consumption factor", to explain the patterns in risk premiums on … from 47 developed and emerging market countries over a four-decade period. Our risk factor reflects changes in the cross …

We show that if an agent is uncertain about the precise form of his utility function, his actual relative risk aversion … may depend on wealth even if he knows his utility function lies in the class of constant relative risk aversion (CRRA … their risk aversion parameter invest less in risky assets than wealthy investors with identical risk aversion uncertainty. …

The computation of various risk metrics is essential to the quantitative risk management of variable annuity guaranteed … produce closed-form approximation of the risk measures for variable annuity guaranteed benefits. The techniques are further … developed in this paper to address in a systematic way risk measures for death benefits with the consideration of dynamic …