Behavioral Choice For Optimal Allocation Of Household Financial Assets

With increasing investable assets of family in China,families start to think about how to rationally allocate their household assets,so as to improve the level of wealth.From the perspective of family,this paper studies the optimal portfolio selection and life insurance purchasing strategy of family,in order to maximize its utility.At present,the domestic studies of optimal allocation of household assets are mostly qualitative analysis.Meanwhile,studies abroad are all based on the expected utility maximization model,assuming that decision makers are rational.In real life,however,investors are not completely rational.So,this paper takes family behavioral characteristics into account,so as to work out optimal investment and life insurance purchase decisions that better meet the reality.Based on presumptive model,considering risk-averse families and loss-averse families,the dynamic optimization model of family household assets allocation is set up.Then,use martingale method and replication technology to work out the optimal investment and life insurance purchasing strategy.Next,analyze the nature of the optimal strategies by property analysis and numerical simulation analysis,to get the complex influence of related parameters on optimal strategies.Meanwhile,compare the differences of the optimal solutions between two kinds of family.Get conclusions according to the analysis.When faced with future uncertainties,both kinds of families tend to acquire future assets to invest in advance,in order to improve wealth.Meanwhile,the correlations between the optimal strategies and relevant variables are generally the same of both kinds of families.However,in the longer investment period,loss-averse families are more aggressive than risk-averse families in the early investment period.Moreover,the total wealth of loss-averse families decreases more slowly with the aging of wage earner than that of risk-averse families as the existence of reference point.Finally,according to the conclusion,this paper gives suggestions on optimal allocation of household financial assets to two kinds of families,as well as suggestions on financial innovation to financial institutions.