There is a common belief that individuals become more risk adverse when their net wealths become greater. However, in the reality, we often see that many phenomenon show many wealthier people are more risk loved than ordinary people. For example, due to regulations, those highly risky investment projects only accept high net wealth individuals to participate, such as PE. Moreover, the investment in the emerging markets (except China) is conducted by wealthy investors and financial institutions. Investment in some emerging markets is very risky, as the economic performance in the emerging markets is highly volatile. In addition, wealthy investors are also willing to become angel investors or participate in venture capital. For example, the famous NBA former player, Kobe Bryant, opened his own venture capital fund, serving other retired wealthy basketball players.
If we consider that wealth helps us to gain our happiness (utility), some wealthy people may have already been wealthy enough to afford everything that ordinary people can imagine, so they would like to find something more interesting. After they leave themselves the wealth that is able to afford their luxurious lifestyle, the wealth remained is used as the wealth to create additional excitement. Gambling is a source of pleasure or excitement; similarly, risky investment could be seen as a type of gambling. However, risky investment does not mean the probabilities of winning and losing are totally dependent on the natural probabilities, it can depend on the careful measure of investors. This means when investors win their investment bets, they can feel a greater victory.
To conclude, considering people like gambling, when people become wealthier, the wealth they are able to afford for gambling-liked investment becomes greater, this may cause when people's wealth reaches a certain level, their risk preferences become more and more preferring taking risk.
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