Evolution, heritable risk and skewness loving

Yuval Heller () and Arthur Robson
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Yuval Heller: Department of Economics, Bar Ilan University

Theoretical Economics, 2021, vol. 16, issue 2

Abstract: Our understanding of risk preferences can be sharpened by considering their evolutionary basis. The existing literature has focused on two sources of risk: idiosyncratic risk and aggregate risk. We introduce a new source of risk, heritable risk, in which there is a positive correlation between the fitness of a newborn agent and the fitness of her parent. Heritable risk was plausibly common in our evolutionary past and it leads to a strictly higher growth rate than the other sources of risk. We show that the presence of heritable risk in the evolutionary past may explain the tendency of people to exhibit skewness loving today.

Keywords: Evolution of preferences; risk attitude; risk interdependence; long-run growth rate; fertility rate (search for similar items in EconPapers)
JEL-codes: D81 D91 (search for similar items in EconPapers)
Date: 2021-05-03
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Evolution, Heritable Risk, and Skewness Loving (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:the:publsh:3949

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