We explore the consequences of higher‐order risk in a standard incomplete‐markets life‐cycle model. We calibrate the model using a canonical income process with persistent and transitory risk, extended to feature cyclical shock distributions with left‐skewness and excess kurtosis. We...

This article investigates the roles of psychological biases for deviations between subjective survival beliefs (SSBs) and objective survival probabilities. We model these deviations through age-dependent inverse S-shaped probability weighting functions. Our estimates suggest that implied...