LI Yajun，etc：The Effect of Risk Attitudes on Diversification of Chinese Household Investment

Abstract：Classic financial theory claims that investors will diversify their portfolios to decrease unsystematic risk and pursue the maximization of utility. Nevertheless, numerous empirical studies find that most investments are poorly diversified. Through a survey of Chinese urban residents investment behavior in 15 cities in 2009, we also find the same characteristic. This paper explores the phenomena from the view of risk attitudes, refining the structure of portfolios and seeking for the factors affecting investment choices. The results show that risk attitude plays a role in portfolio structure. There exists a negative relationship between the risk aversion degree of investment decision makers and the probability of owning highly diversified portfolios.

Key words： Risk Attitudes    Portfolio Diversification    Household Investment

source:Finance & Trade Economics ,No.7,2015