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On the biological foundation of risk preferences

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  • Robatto, Roberto
  • Szentes, Balázs

Abstract

This paper considers a continuous-time biological model in which the growth rate of a population is determined by the risk attitude of its individuals. We consider choices over lotteries which determine the number of offspring and involve both idiosyncratic and aggregate risks. We distinguish between two types of aggregate risk: environmental variations and natural disasters. Environmental variations influence the death and birth rates, while natural disasters result in instantaneous drops in population size.

Suggested Citation

  • Robatto, Roberto & Szentes, Balázs, 2017. "On the biological foundation of risk preferences," Journal of Economic Theory, Elsevier, vol. 172(C), pages 410-422.
    • Handle: RePEc:eee:jetheo:v:172:y:2017:i:c:p:410-422
    DOI: 10.1016/j.jet.2017.10.002
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    References listed on IDEAS

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    1. Arthur J. Robson, 2002. "Evolution and Human Nature," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 89-106, Spring.
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    3. Robson, Arthur J., 1996. "A Biological Basis for Expected and Non-expected Utility," Journal of Economic Theory, Elsevier, vol. 68(2), pages 397-424, February.
    4. Dekel, Eddie & Scotchmer, Suzanne, 1999. "On the Evolution of Attitudes towards Risk in Winner-Take-All Games," Journal of Economic Theory, Elsevier, vol. 87(1), pages 125-143, July.
    5. Arthur J. Robson, 2001. "The Biological Basis of Economic Behavior," Journal of Economic Literature, American Economic Association, vol. 39(1), pages 11-33, March.
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    7. Robson, Arthur J., 1996. "The Evolution of Attitudes to Risk: Lottery Tickets and Relative Wealth," Games and Economic Behavior, Elsevier, vol. 14(2), pages 190-207, June.
    8. Arthur J. Robson & Larry Samuelson, 2009. "The Evolution of Time Preference with Aggregate Uncertainty," American Economic Review, American Economic Association, vol. 99(5), pages 1925-1953, December.
    9. Becker, Gary S, 1976. "Altruism, Egoism, and Genetic Fitness: Economics and Sociobiology," Journal of Economic Literature, American Economic Association, vol. 14(3), pages 817-826, September.
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    Citations

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    Cited by:

    1. Robson, Arthur & Samuelson, Larry, 2022. "The evolution of risk attitudes with fertility thresholds," Journal of Economic Theory, Elsevier, vol. 205(C).
    2. Robson, Arthur J. & Samuelson, Larry, 2019. "Evolved attitudes to idiosyncratic and aggregate risk in age-structured populations," Journal of Economic Theory, Elsevier, vol. 181(C), pages 44-81.
    3. Heller, Yuval & Robson, Arthur J., 2021. "Evolution, heritable risk and skewness loving," Theoretical Economics, Econometric Society, vol. 16(2), May.
    4. Wu, Jiabin & Zhang, Hanzhe, 2020. "Preference Evolution in Different Marriage Markets," Working Papers 2020-1, Michigan State University, Department of Economics.
    5. Sadowski, Philipp & Sarver, Todd, 2024. "Adaptive preferences: An evolutionary model of non-expected utility and ambiguity aversion," Journal of Economic Theory, Elsevier, vol. 218(C).
    6. Yuval Heller & Ilan Nehama, 2021. "Evolutionary Foundation for Heterogeneity in Risk Aversion," Papers 2110.11245, arXiv.org, revised Jan 2023.
    7. Songjia Fan & Yi Tao & Cong Li, 2022. "Evolutionary rationality of risk preference," Papers 2206.09813, arXiv.org.
    8. Heller, Yuval & Nehama, Ilan, 2023. "Evolutionary foundation for heterogeneity in risk aversion," Journal of Economic Theory, Elsevier, vol. 208(C).
    9. Wu, Jiabin & Zhang, Hanzhe, 2021. "Preference evolution in different matching markets," European Economic Review, Elsevier, vol. 137(C).
    10. Heller, Yuval & Robson, Arthur, 2019. "Evolution and Preference for Local Risk," MPRA Paper 95264, University Library of Munich, Germany.

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    More about this item

    Keywords

    Risk preferences; Evolution; Expected utility;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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