This paper explores the relationship between risk attitude and asset diversification in household portfolios. We first … theory is compatible with observed diversification patterns. Based on the German Socioeconomic Panel which provides unique … socioeconomic characteristics, the propensity for taking investment risk is an important predictor of a household's diversification …

This study extends the literature on portfolio choice under prospect theory preferences by introducing a two …-period life cycle model, where the household decides on optimal consumption and investment in a portfolio with one risk-free and … one risky asset. The optimal solution depends primarily on the household's choice of the present value of the consumption …

This paper explores the relationship between risk attitude and asset diversification in household portfolios. We first … theory is compatible with observed diversification patterns. Based on the German Socioeconomic Panel which provides unique … socioeconomic characteristics, the propensity for taking investment risk is an important predictor of a household's diversification …

correlated in most villages with portfolio-choice estimates. The heterogeneity matters for policy: Although the average household …

Online Appendix for “Ambiguity Aversion and Household Portfolio Choice Puzzles: Empirical Evidence” …

. Specifically, this paper empirically tests if prospect theory's loss aversion decreases insurance demand and increases savings … demand. Prospect theory predicts that boundedly rational consumers may view pure protection insurance, such as term …

This study examines household portfolio choice through the retirement transition. I show that couples significantly …. These findings are consistent with a model of collective household decision making in which spouses have heterogeneous risk … preferences, and suggest that dynamics in the distribution of intra-household bargaining power generate time-varying household …

We test the relation between ambiguity aversion and five household portfolio choice puzzles: non-participation in … representative U.S. household survey, we measure ambiguity preferences using custom-designed questions based on Ellsberg urns. As … theory predicts, ambiguity aversion is negatively associated with stock market participation, the fraction of financial …