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U ( w) - u ( w - 1) = u ( w + 1) - u ( w) U ( w) - u ( w - 1) u ( w + 1) - u ( w) Let"s continue to look at how people behave. Do preferences
U ( w) - u ( w - 1) = u ( w + 1) - u ( w) U ( w) - u ( w - 1) < u ( w + 1) - u ( w) Let"s continue to look at how people behave. Do preferences change as wealth changes? Let"s think intertemporally: T0: Investor w=12,000; risky assets = 6,000 T1 : Investor w=20,000; risky assets = ????
