Alternative Views on the Link between Risk Aversion and Diminishing Marginal Utility of Wealth

Although the link between risk aversion and diminishing marginal utility of wealth is academically well established, theoretical discussions concerning its empirical validity remain. The presented, review-type paper aims to briefly examine roots responsible for different views on this association in order provide a broader perspective alternative explanations. This latter task assisted by comparative analysis two recent pieces research Rick Falkenstein Matthew Rabin; duo papers, handpicked at author’s discretion demonstrate convergence ideas from authors (and backgrounds). In support argumentation, also presents critical overview equity premium puzzle as seen through prism behavioural finance. main contributions include evidence-based concept relative reconfirmation meaningful role finance economics