A simple portfolio allocation model of financial wealth

Personal Financial Planning and the Allocation of Disposable Wealth

In the process ofpersonalfinancial planning individuals are confronted with a time dependent wealth allocation problem. Oftentimes the solution involves selectingjnancial products based on objective criteria, for example, product cost and expected return. While objective criteria are important to the selection process, an individual’s subjective valuation of all criteria, objective and subjecti...

How Investors Face Financial Risk: Loss Aversion and Wealth Allocation

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A Financial Model of the Firm: Risk and Portfolio Selection∗

We address explicitly the issue of risk in the theory of the firm. To that end, we present a model in which the shareholders’ portfolio selection of assets and the decisions of the firm are jointly determined through the market process. The model allows to study the role of markets and prices on the type of risky activities undertaken by a firm and the allocation of random profit among sharehol...

Wealth condensation in a simple model of economy

We introduce a simple model of economy, where the time evolution is described by an equation capturing both exchange between individuals and random speculative trading, in such a way that the fundamental symmetry of the economy under an arbitrary change of monetary units is insured. We investigate a mean-field limit of this equation and show that the distribution of wealth is of the Pareto (pow...

Non-uniform Wealth Distribution in a Simple Spatial Banking Model