Abstract
This paper investigates an investor's effort allocation problem between working and managing his investment portfolio over his life cycle. An investor is endowed with a fixed effort every period, which can be used to either work harder or learn more information about the financial market. If he puts more effort into working, his current and future wages increase. But if he puts more effort into investing, he gets more precise signals of risky assets. I find that an investor's working effort is hump-shaped over his career: he works harder when young because his potential promotion for work is higher, but he exerts more effort into learning information about the financial market later on. His risky asset investment reaches a peak near retirement. The results match the data on Panel Study of Income Dynamics reasonably well.
| Original language | English |
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| Publication status | Presented - Oct 2014 |
| Externally published | Yes |
| Event | 2014 Financial Management Association Annual Meeting - Nashville, United States Duration: 15 Oct 2014 → 18 Oct 2014 https://www.fma.org/past-programs |
Conference
| Conference | 2014 Financial Management Association Annual Meeting |
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| Abbreviated title | 2014 FMA Annual Meeting |
| Place | United States |
| City | Nashville |
| Period | 15/10/14 → 18/10/14 |
| Internet address |