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The role of the marginal rate of substitution of wealth for a loss averse investor

Author

Listed:
  • Jaroslava Hlouskova

    (Financial Markets and Econometrics, Institute for Advanced Studies, Vienna, Austria)

  • Panagiotis Tsigaris

    (Department of Economics, Thompson Rivers University)

Abstract

The marginal rate of substitution and the relative prices of goods have been used in economics to explain household's behavior but they have not been used yet in the behavioral economics literature. This note attempts to fill the gap in the literature with an application to a loss averse investor's demand for a risky asset in a one period model.

Suggested Citation

  • Jaroslava Hlouskova & Panagiotis Tsigaris, 2016. "The role of the marginal rate of substitution of wealth for a loss averse investor," Economics Bulletin, AccessEcon, vol. 36(4), pages 2250-2260.
    • Handle: RePEc:ebl:ecbull:eb-14-00533
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Loss Aversion; Reference Level; Marginal Rate of Substitution; Market trade-off; Risky Asset;
    All these keywords.

    JEL classification:

    • G0 - Financial Economics - - General
    • D1 - Microeconomics - - Household Behavior

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