Status, Risk–Taking and Intertemporal Substitution in a Model of Stochastic Growth
نویسنده
چکیده
This paper examines intertemporal risk–taking in a stochastically growing economy with externalities in human capital accumulation where agents have preferences for social status. In order to isolate the effects of status concerns on long–run expected growth, the analysis is embedded in a nonexpected utility setting, which disentangles the effects from risk aversion and intertemporal substitution. We examine the interaction between status desire and risk, risk aversion and intertemporal substitution. The externalities generated by the status game are able to correct the allocative distortions from the knowledge spillovers. JEL classification: D8 — D9 — O4
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