risk and borrowing constraints. The model matches key empirical results on college enrollment patterns, returns to …

Robust decision making implies welfare costs or robustness premia when the approximating model is the true data … existing human capital to this end. We find that the extent of the robustness premia critically depends on the productivity of … output can fall. -- robustness premium ; model misspecification ; precautionary behavior …

potentially loss averse around their expected outcome make risky investments in education and we draw on optimal tax theory to … explore the design of policy. The model highlights the critical roles played by (i) the relationship between behavioural risk … preferences, standard risk aversion and labour supply behaviour, (ii) the risk properties of education, and (iii) the degree of …