Dynamic decision making with feasibility goals: A procedural-rationality approach
Abstract This paper proposes a new framework of intertemporal choice: decision making by means of so-called feasibility goals. These refer to the feasibility of certain target levels of consumption associated with specific future benchmark scenarios. The feasibility goals framework takes into account bounded/procedural rationality without stepping outside the realm of an optimization framework. The paper has two aims. First, it provides a general characterization of the feasibility goals framework. Second, it provides a simple life cycle model with feasibility goals to illustrate the applicability of the concept. The life cycle model is promising for better understanding individual portfolio choice.
Year of publication: |
2011
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Authors: | Binswanger, Johannes |
Published in: |
Journal of Economic Behavior & Organization. - Elsevier, ISSN 0167-2681. - Vol. 78.2011, 3, p. 219-228
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Publisher: |
Elsevier |
Keywords: | Feasibility goals Planning Bounded/procedural rationality Life cycle saving Portfolio choice |
Saved in:
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