The only thing certain in economic life is that most of it is conducted into an uncertain environment; that raises a question though: what makes individuals pursue entrepreneurship which engages too much risk for an unsure, or too little, return? Research has shown that people tend to be...

Contracts with embedded prepayment/extension options are subject to behavioral risk, due to the unpredictable exercise strategy followed by the option holder. Empirical data show that, in many situations and for different reasons, investors do not act purely on the strength of financial...

When giving to one charity, individuals face two types of uncertainty, descriptive and normative. We report a between-subjects charitable-giving experiment which provides first data on normative uncertainty (n=1890). In our experiment, participants can bid for either descriptive information,...

This research verifies the existence of the aversion to uncertainty bias in individual financial decisions. It also evaluates the effects of gender and knowledge in this bias. We considered a sample of 80 undergraduate management students from Universidade Católica de Brasília. The results...

This paper shows that individual beliefs on the effectiveness of formal and informal sources of risk sharing determine financial precautionary behavior. We present empirical evidence demonstrating that higher trust in public insurance systems reduces net liquid wealth while higher trust in...

In the context of income dynamics, we investigate whether aspects of agents' superior information relative to the econometrician's limited information are captured in subjective expectations data. It is natural, for instance, to assume that the econometrician cannot observe idiosyncratic shocks...

We provide a critique of the methods that have been used to derive measures of income risk and draw attention to the importance of demographic factors as a source of income risk. We also propose new measures of the contribution to total income risk of demographic and labour market factors....

We use cross-country microdata to analyse the risk taking of households in Europe and the US. Concerning the extensive as well as the intensive margin of risky assets, European households differ substantially from US households; but also inside Europe we document substantial differences....

We use cross-country microdata to analyse the risk taking of households in Europe and the US. Concerning the extensive as well as the intensive margin of risky assets, European households differ substantially from US households; but also inside Europe we document substantial differences....