Working Paper 706

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Portfolio Choices and Risk Preferences in Village Economies

Pierre-Andre Chiappori
Krislert Samphantharak
Sam Schulhofer-Wohl - Senior Vice President and Director of Research
Robert Townsend - Economics Professor, University of Chicago

Published June 3, 2013

We use a model of optimal portfolio choice to measure heterogeneity in risk aversion among households in Thai villages. There is substantial heterogeneity in risk preferences, positively correlated in most villages with alternative estimates based on a full risk-sharing model.

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