theory suggests that with increasing labor income risk, the reluctance of households to hold stocks increases. We propose to … measure income risk as the observed variation of household income over a five year period. We find that indeed higher income … risk reduces the propensity to invest in stocks. However, when controlling for household heterogeneity as well as …

crisis. Within a partial investment model, two kinds of uncertainty are introduced: volatility and disaster risk. The article … important but often neglected element of micro- and macroeconomic theory. With the onset of the financial crisis in 2007 and the … investment decisions play with regard to business cycle fluctuations.<br><br>However, the inclusion of real option values in …