Evolution and Preference for Local Risk

Research output: Contribution to conferencePaperpeer-review


Our understanding of risk preferences can be sharpened by considering their evolutionary basis. Recently, Robatto & Szentes (2017) found that both aggregate risk and idiosyncratic risk generate the same growth rate in a continuous time setting. We introduce a new source of risk, which is correlated between agents in the same location, but is uncorrelated between agents in different locations. We show that this local risk induces a strictly higher growth rate. This shows that interdependence of risk and population structure have important implications in a continuous-time setting, and that natural selection induces individuals to prefer local risk.
Original languageAmerican English
StatePublished - 2019
EventIsrael Annueal Game Theory Conference - Game Thoery Society, Beer Sheva (Ben Gurion University), Israel
Duration: 9 Jun 20199 Jun 2019
http://in.bgu.ac.il/en/humsos/Econ/pages/news/The%2011th%20annual%20conference%20of%20the%20Israeli%20Chapter%20of%20the%20Game%20Theory%20Society.aspx (Website)


ConferenceIsrael Annueal Game Theory Conference
CityBeer Sheva (Ben Gurion University)
Internet address


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