Portfolio Choice in the Presence of Nontradeable Income: An Experimental Analysis

Alexander Klos () and Martin Weber
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Alexander Klos: Sonderforschungsbereich 504, Postal: L 13, 15, D-68131 Mannheim

No 04-01, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim, Sonderforschungsbereich 504, University of Mannheim

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

Pages: 37 pages
Date: 2004-02-03
Note: Financial support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Portfolio Choice in the Presence of Non‐Tradable Income: An Experimental Analysis (2006)
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)
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