search query: @author Rochet, J.-C. / total: 10
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| Author: | Bommier, A. Rochet, J.-C. |
| Title: | Risk aversion and planning horizons |
| Journal: | Journal of the European Economic Association
2006 : JUN, VOL. 4:4, p. 708-734 |
| Index terms: | life cycles risk aversion |
| Language: | eng |
| Abstract: | This paper discusses the importance of the additive separability of preferences that is used in most theoreetical models of the life cycle. It is shown that when additive separability is abandoned and interactions betweem consumptions at different dates are taken into account, an interesting relation emerges between risk aversion and lenght of the planning horizon. Especiallym when consumptions at different dates are specific substitutesm risk aversion increases with horizon length. This may explain the empirical finding that individuals seem to increase the share of wealth held in the risky assets as they become older. |
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