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Evolved attitudes to idiosyncratic and aggregate risk in age-structured populations

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  • Robson, Arthur J.
  • Samuelson, Larry

Abstract

We examine the evolutionary foundations of risk attitudes in age-structured populations. The effect of idiosyncratic risk concerning fertility or mortality rates is captured by the corresponding mean fertility or mortality rate. The effect of aggregate risk, relative to the mean, varies with the type of risk and age. We establish conditions under which aggregate risk in fertility rates at young ages increases the population growth rate (compared to the corresponding mean fertility), but such risk in fertility rates at old ages reduces the growth rate. On the other hand, aggregate risk in mortality at young as well as old ages leads to increased growth rates.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:jetheo:v:181:y:2019:i:c:p:44-81
    DOI: 10.1016/j.jet.2019.01.006
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    References listed on IDEAS

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    1. Thomas Dohmen & Armin Falk & Bart H. H. Golsteyn & David Huffman & Uwe Sunde, 2017. "Risk Attitudes Across The Life Course," Economic Journal, Royal Economic Society, vol. 127(605), pages 95-116, October.
    2. Paul Slovic & Baruch Fischhoff & Sarah Lichtenstein, 1982. "Why Study Risk Perception?," Risk Analysis, John Wiley & Sons, vol. 2(2), pages 83-93, June.
    3. Ben-Porath Elchanan & Dekel Eddie & Rustichini Aldo, 1993. "On the Relationship between Mutation Rates and Growth Rates in a Changing Environment," Games and Economic Behavior, Elsevier, vol. 5(4), pages 576-603, October.
    4. 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.
    5. 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.
    6. Thomas Dohmen & Armin Falk & Bart H. H. Golsteyn & David Huffman & Uwe Sunde, 2017. "Risk Attitudes Across The Life Course," Economic Journal, Royal Economic Society, vol. 127(605), pages 95-116, October.
    7. Robatto, Roberto & Szentes, Balázs, 2017. "On the biological foundation of risk preferences," Journal of Economic Theory, Elsevier, vol. 172(C), pages 410-422.
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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. Heller, Yuval & Robson, Arthur J., 2021. "Evolution, heritable risk and skewness loving," Theoretical Economics, Econometric Society, vol. 16(2), May.
    3. 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).
    4. Terence C. Burnham & Jay Phelan, 2022. "Ordinaries 10," Journal of Bioeconomics, Springer, vol. 24(3), pages 181-202, October.
    5. Yuval Heller & Ilan Nehama, 2021. "Evolutionary Foundation for Heterogeneity in Risk Aversion," Papers 2110.11245, arXiv.org, revised Jan 2023.
    6. Heller, Yuval & Nehama, Ilan, 2023. "Evolutionary foundation for heterogeneity in risk aversion," Journal of Economic Theory, Elsevier, vol. 208(C).
    7. Wu, Jiabin & Zhang, Hanzhe, 2021. "Preference evolution in different matching markets," European Economic Review, Elsevier, vol. 137(C).
    8. 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

    Evolution; Attitudes to risk; Aggregate; Idiosyncratic; Life cycle; Age structure;
    All these keywords.

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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