theoretical predictions, we find that an increase in income risk is associated with higher savings for loss-averse individuals … the internal margin, i.e., the strength, of loss aversion, and empirically study the relation between income risk …, experimentally elicited loss aversion and precautionary savings. We do so using a sample of 640 individuals from the low-income …

empirically study the relation between income risk, experimentally elicited loss aversion, and precautionary savings. We do so … subject to substantial income risk. In line with the theoretical predictions, we find that an increase in income risk is … aversion. An accompanying laboratory experiment confirms that an exogenous increase in income risk causally leads to this …

and time allocation. Our four main findings are: (i) subjects exercise more effort under certainty than under risk; (ii …) savings are strictly positive for at least 85 percent of subjects (iii) a majority of subjects uses time allocation to smooth …

intertemporal substitution. To study this, we set up a two-period model with wage uncertainty. This extends the standard savings … and time allocation. Our four main findings are: (i) subjects exercise more effort under certainty than under risk; (ii …) savings are strictly positive for at least 85 percent of subjects (iii) a majority of subjects uses time allocation to smooth …

bubbles. We consider a setting where participants sorted according to their degree of risk aversion trade in experimental … asset markets. We show that risk sorting is able to explain bubbles partially: Markets with the most risk-tolerant traders … exhibit larger bubbles than markets with the most risk averse traders. In our study risk aversion does not correlate with …