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Portfolio choice and risk attitudes: a household bargaining approach

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  • Tansel Yilmazer

    ()

  • Stephen Lich

    ()

Abstract

The goal of this study is to understand how the households decide on portfolio asset allocation when the husband and wife have different risk preferences. Using data from the Health and Retirement Study for 1992–2006, we show that the share of risky assets in portfolios of two-person households increases with the risk tolerance of the spouse who has more bargaining power. The risk tolerance of the spouse who has less bargaining power does not seem to affect the share of household wealth allocated to risky assets. These results are consistent with a cooperative bargaining framework where the investment in risky assets depends on the bargaining power of the more risk tolerant spouse. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Tansel Yilmazer & Stephen Lich, 2015. "Portfolio choice and risk attitudes: a household bargaining approach," Review of Economics of the Household, Springer, vol. 13(2), pages 219-241, June.
  • Handle: RePEc:kap:reveho:v:13:y:2015:i:2:p:219-241
    DOI: 10.1007/s11150-013-9207-8
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    File URL: http://hdl.handle.net/10.1007/s11150-013-9207-8
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. ROSSI Cristina & SIERMINSKA Eva, 2015. "Single again? Saving patterns when widowhood occurs," LISER Working Paper Series 2015-04, LISER.
    2. Donni, Olivier & Molina, José Alberto, 2018. "Household Collective Models: Three Decades of Theoretical Contributions and Empirical Evidence," IZA Discussion Papers 11915, Institute for the Study of Labor (IZA).
    3. repec:zbw:espost:175649 is not listed on IDEAS
    4. Grabka, Markus M. & Marcus, Jan & Sierminska, Eva, 2015. "Wealth Distribution within Couples," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 459-486.
    5. Luc Arrondel & Nicolas Frémeaux, 2013. ""For richer, for poorer": savings preferences and choice of spouse," Working Papers halshs-00786245, HAL.
    6. repec:taf:eurjfi:v:24:y:2018:i:12:p:1026-1046 is not listed on IDEAS
    7. Luc Arrondel & Nicolas Frémeaux, 2013. ""For richer, for poorer": savings preferences and choice of spouse," PSE Working Papers halshs-00786245, HAL.
    8. Kokot, Johanna, 2017. "Does a spouse's health shock influence the partner's risk attitudes?," Ruhr Economic Papers 707, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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