Risk aversion and wealth: Evidence from person-to-person lending portfolios

Daniel Paravisini*, Veronica Rappoport, Enrichetta Ravina

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

96 Scopus citations


We estimate risk aversion from investors' financial decisions in a person-toperson lending platform. We develop a method that obtains a risk-aversion parameter from each portfolio choice. Since the same individuals invest repeatedly, we construct a panel data set that we use to disentangle heterogeneity in attitudes toward risk across investors, from the elasticity of risk aversion to changes in wealth. We find that wealthier investors are more risk averse in the cross section and that investors become more risk averse after a negative housingwealth shock. Thus, investors exhibit preferences consistent with decreasing relative risk aversion and habit formation.

Original languageEnglish (US)
Pages (from-to)279-297
Number of pages19
JournalManagement Science
Issue number2
StatePublished - Feb 2017


  • Crowdfunding
  • Portfolio choice
  • Risk aversion

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research


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