Decision-Making under Risk: From Individual Preferences to Couple Decisions
40 Pages Posted: 14 Jun 2019 Last revised: 15 Jun 2019
Date Written: October 17, 2018
Abstract
There is a growing literature that studies intrahousehold decisions, although few papers study risk taking behavior. Yet, risk is unavoidable in many couple decisions, including residential location, labour supply, children or financial investments. In this paper, we consider couples facing financial risky decisions. Such decisions have implications for the couple and are thus likely to be made collectively by the spouses. Moreover, spouses may have altruistic preferences. Using a sample of 110 couples in former East Germany, we decompose the process leading from individual preferences to couple decision under risk, taking into account both spouses bargaining powers and altruism.
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