Investment Choices: Indivisible non-Marketable Assets and Bounded Rationality
Several investment decisions deal with non-marketable assets. Nonmarketable assets are available only to one investor and are often indivisible. This has relevant consequences on investor investment opportunities. Adhering to a mean variance representation of the investment space and considering a non-marketable asset (divisible or not), we derive some possible investment scenarios an investor may face. Furthermore, we show how bounded rationality affects investor portfolio choices. Our results define a set of conditions under which the non-marketable asset represents a good investment and show that, under certain assumptions, the efficient frontier exhibits non-linearities and intervals of discontinuity. That allows us to classify investors who can access a non-marketable investment as either entrepreneurs, who undertake it, or clerks, who invest their entire wealth on the market.
|Date of creation:||Jan 2011|
|Date of revision:|
|Publication status:||Published in Economic Modelling, 28(6):2387-2394, 2011|
|Contact details of provider:|| Postal: Via Patara, 3, 47921 Rimini (RN)|
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NBER Working Papers
2774, National Bureau of Economic Research, Inc.
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