Forsfält, Tomas (Dept. of Economics, Stockholm University)
Abstract
How does the age of risk-averse individuals affect investments in private projects? This question is analyzed under the assumption that such individuals have to invest a large fraction of their personal wealth in order to establish a new firm. Thresholds conditional on age that trigger a switch from one asset to another are derived in a continuous-time portfolio choice model with zero-or -one choices. As the investor gets older - and depending on random events - not only wealth, but also the thresholds, might increase. Thus, there are two counteracting effects on the likelihood of becoming an entrepreneur.
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Publisher Info
Paper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number
1999:18.
Length: 25 pages Date of creation: 01 Nov 1999 Date of revision: Handle: RePEc:hhs:sunrpe:1999_0018
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