Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/18758
Authors: 
Gollier, Christian
Year of Publication: 
2005
Series/Report no.: 
CESifo working papers 1394
Abstract: 
We explore the various arguments for and against the recommendation that younger households should invest a larger share of their pension wealth in risky assets. The ability of young agents to compensate their financial losses by saving more during their career provides the strongest argument in favour of younger people investing more aggressively in the stock market. Meanreversion in stock returns yields another argument. However, the uninsurability of the risky human capital goes in the opposite direction, together with the imperfect knowledge that young investors have about the distribution of asset returns.
Subjects: 
dynamic portfolio choice
pension plan
retirement
time horizon
JEL: 
G11
Document Type: 
Working Paper

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