Abstract
Our understanding of risk preferences can be sharpened by considering their evolutionary basis. Recently, Robatto & Szentes (2017) found that both aggregate risk and idiosyncratic risk generate the same growth rate in a continuous time setting. We introduce a new source of risk, which is correlated between agents in the same location, but is uncorrelated between agents in different locations. We show that this local risk induces a strictly higher growth rate. This shows that interdependence of risk and population structure have important implications in a continuous-time setting, and that natural selection induces individuals to prefer local risk.
| Original language | American English |
|---|---|
| State | Published - 2019 |
| Event | Israel Annueal Game Theory Conference - Game Thoery Society, Beer Sheva (Ben Gurion University), Israel Duration: 9 Jun 2019 → 9 Jun 2019 http://in.bgu.ac.il/en/humsos/Econ/pages/news/The%2011th%20annual%20conference%20of%20the%20Israeli%20Chapter%20of%20the%20Game%20Theory%20Society.aspx (Website) |
Conference
| Conference | Israel Annueal Game Theory Conference |
|---|---|
| Country/Territory | Israel |
| City | Beer Sheva (Ben Gurion University) |
| Period | 9/06/19 → 9/06/19 |
| Internet address |