TY  - RPRT
AB  - Assuming that an individual's rank in the wealth distribution is the only factor determining the individual's wellbeing, we analyze the individual's risk preferences in relation to gaining or losing rank, rather than the individual's risk preferences towards gaining or losing absolute wealth. We show that in this characterization of preferences, a high-ranked individual is more willing than a low-ranked individual to take risks that can provide him with a rise in rank: relative risk aversion with respect to rank in the wealth distribution is a decreasing function of rank. This result is robust to incorporating (the level of) absolute wealth in the individual's utility function. 
AU  - Stark, Oded
AU  - Budzinski, Wiktor
AU  - Jakubek, Marcin
DA  - 2019-11-21
DA  - 2019-11-21
DO  - 10.22004/ag.econ.296754
DO  - doi
ID  - 296754
KW  - Financial Economics
KW  - Risk and Uncertainty
KW  - Rank in the wealth distribution
KW  - Rank-based utility
KW  - Variation in risk-taking behavior
KW  - Relative risk aversion
L1  - https://ageconsearch.umn.edu/record/296754/files/DP_283_OS.pdf
L2  - https://ageconsearch.umn.edu/record/296754/files/DP_283_OS.pdf
L4  - https://ageconsearch.umn.edu/record/296754/files/DP_283_OS.pdf
LA  - eng
LA  - English
LK  - https://ageconsearch.umn.edu/record/296754/files/DP_283_OS.pdf
N2  - Assuming that an individual's rank in the wealth distribution is the only factor determining the individual's wellbeing, we analyze the individual's risk preferences in relation to gaining or losing rank, rather than the individual's risk preferences towards gaining or losing absolute wealth. We show that in this characterization of preferences, a high-ranked individual is more willing than a low-ranked individual to take risks that can provide him with a rise in rank: relative risk aversion with respect to rank in the wealth distribution is a decreasing function of rank. This result is robust to incorporating (the level of) absolute wealth in the individual's utility function. 
PY  - 2019-11-21
PY  - 2019-11-21
T1  - Pure rank preferences and variation in risk-taking behavior
TI  - Pure rank preferences and variation in risk-taking behavior
UR  - https://ageconsearch.umn.edu/record/296754/files/DP_283_OS.pdf
Y1  - 2019-11-21
T2  - ZEF – Discussion Papers on Development Policy No. 283
ER  -