Abstract
The degree of risk-aversion determines portfolio holdings and subsequently the distribution of wealth. Do we inherit our preferences, or are they determined randomly or through experience? Can preferences be "learned"? The empirically observed Pareto wealth distribution at the high-wealth range may provide an answer to these questions. We show that the Pareto wealth distribution implies an upper bound on the role of heredity in determining risk-aversion.
| Original language | English |
|---|---|
| Pages (from-to) | 157-168 |
| Number of pages | 12 |
| Journal | Journal of Mathematical Economics |
| Volume | 41 |
| Issue number | 1-2 |
| DOIs | |
| State | Published - Feb 2005 |
Keywords
- Heredity
- Pareto
- Risk-aversion
- Wealth distribution
