Portfolio Choice in the Presence of Non-Tradable Income: An Experimental Analysis

Klos Alexander and Martin Weber
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Klos Alexander: University of Münster,Münster, Germany

German Economic Review, 2006, vol. 7, issue 4, 427-448

Abstract: This paper reports the results of an experiment on portfolio choice in the presence of non-tradable income. The non-tradable income part could either be riskless or risky (background risk). In many cases, we observe behavior that is qualitatively consistent with the predictions of normative theory. However, correlations between financial and non-tradable wealth are neglected. The computation of aggregated risk profiles helps subjects to partly overcome the deviations from normative theory due to neglect of correlations.

Keywords: Portfolio choice; experimental economics; non-tradable income; background risk (search for similar items in EconPapers)
Date: 2006
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Related works:
Journal Article: Portfolio Choice in the Presence of Non‐Tradable Income: An Experimental Analysis (2006)
Working Paper: Portfolio choice in the presence of nontradeable income: an experimental analysis (2004)
Working Paper: Portfolio Choice in the Presence of Nontradeable Income: An Experimental Analysis (2004)
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DOI: 10.1111/j.1468-0475.2006.00128.x

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