Is risk-aversion hereditary?

Moshe Levy*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

5 Scopus citations

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 languageAmerican English
Pages (from-to)157-168
Number of pages12
JournalJournal of Mathematical Economics
Volume41
Issue number1-2
DOIs
StatePublished - Feb 2005

Keywords

  • Heredity
  • Pareto
  • Risk-aversion
  • Wealth distribution

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