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Information acquisition and asset allocation with unknown income growth

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  • Wang, Yuanping
  • Wang, Dongfang
  • Hou, Chunxiao

Abstract

We study the learning effects on consumption–portfolio rules with costly financial information acquisition and find that the agent’s acquiring information induces an additional demand for risky asset which is positively related to the degree of uncertainty about the income growth.

Suggested Citation

  • Wang, Yuanping & Wang, Dongfang & Hou, Chunxiao, 2022. "Information acquisition and asset allocation with unknown income growth," Economics Letters, Elsevier, vol. 213(C).
    • Handle: RePEc:eee:ecolet:v:213:y:2022:i:c:s0165176522000519
    DOI: 10.1016/j.econlet.2022.110364
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    References listed on IDEAS

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    More about this item

    Keywords

    Information acquisition; Learning; Income growth; Consumption; Risky asset;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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