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Investment flexibility and the acceptance of risk

Article Abstract:

A simple two-period model has proven that investment flexibility influences an investor's ability to shift his portfolio and accept risks. The greater an investor's ability to change his investment after intermediary shocks to wealth, the riskier should be his portfolio. This proves true when an investor is not able to control the size of risky investment but can select between a risky and a riskless asset. However, if there is more risky asset every period, counterexamples show that flexibility will not usually assure greater risk taking.

Author: Gollier, Christian, Zeckhauser, Richard J., Lindsey, John
Publisher: Elsevier B.V.
Publication Name: Journal of Economic Theory
Subject: Economics
ISSN: 0022-0531
Year: 1997
Management, Investments

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An index of loss aversion

Article Abstract:

Risk aversion is generally caused due to loss of aversion. One of the indexes of loss aversion leads to a clear decomposition of risk attitude into three distinct components, basic utility, probability weighting and loss aversion. The main theorem reflects the comparison of different decision makers through observed choices.

Author: Wakker, Peter P., Kobberling, Veronika
Publisher: Elsevier B.V.
Publication Name: Journal of Economic Theory
Subject: Economics
ISSN: 0022-0531
Year: 2005

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Optimal welfare and in-work benefits with search unemployment and observable abilities

Article Abstract:

Empirical model of effects of taxation policies and social assistance for facilitating employment of workers is presented. Need for providing greater in-work tax benefits to employees of firms for helping to achieve this objective is discussed.

Author: Bovenberg, Lans, Boone, Jan
Publisher: Elsevier B.V.
Publication Name: Journal of Economic Theory
Subject: Economics
ISSN: 0022-0531
Year: 2006
Labor force information, Public affairs, Social aspects, Evaluation, Employment, Tax policy, Taxation, Interpersonal relations, Workers

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Subjects list: Analysis, Risk management, Netherlands
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