Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/241845 
Year of Publication: 
2020
Citation: 
[Journal:] Accounting & Finance [ISSN:] 1467-629X [Volume:] 61 [Publisher:] Wiley [Place:] Hoboken, NJ [Year:] 2020 [Pages:] 1743-1774
Publisher: 
Wiley, Hoboken, NJ
Abstract: 
We examine the relation between households’ wealth and relative risk aversion (RRA) in two different frameworks: the Behavioural Portfolio Theory (BPT) and Merton’s consumption and portfolio choice model (CPCM). We apply the BPT to field data for the first time and show that the BPT provides a better fit than the CPCM to explain the financial risk-taking of the households in Deutsche Bundesbank’s Panel on Household Finances survey. However, both models indicate decreasing RRA. While households’ education and financial literacy hardly improve the fit of either model, households show different risk-taking behaviour in accordance with their self-assessed risk attitude.
Subjects: 
Household finance
Relative risk aversion
Behavioural portfolio theory
Consumption and portfolio choice model
Risk‐taking
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Article
Document Version: 
Published Version

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