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Who saves more, the naive or the sophisticated agent?

Groneck, Max; Ludwig, Alexander; Zimper, Alexander - 2019

We construct and solve a dynamically inconsistent Choquet expected utility life-cycle model for naive and sophisticated agents, respectively. Pollak (1968) shows that the realized saving behavior of naive and sophisticated agents be- comes identical for a logarithmic period-utility function. As...

Persistent link: https://www.econbiz.de/10012110305

Chapter 2. Rationality and Dynamic Consistency Under Risk and Uncertainty

Hammond, Peter J.; Zank, Horst - In: Handbook of the economics of risk and uncertainty : volume 1, (pp. 41-97). 2014

For choice with deterministic consequences, the standard rationality hypothesis is ordinality, i.e., maximization of a weak preference ordering. For choice under risk (resp. uncertainty), preferences are assumed to be represented by the objectively (resp. subjectively) expected value of a von...

Persistent link: https://www.econbiz.de/10014025530

The two faces of independence : betweenness and homotheticity

Burghart, Daniel R.; Epper, Thomas; Fehr, Ernst - 2014

Many studies document failures of expected utility’s key assumption, the independence axiom. Here, we show that independence can be decomposed into two distinct axioms - betweenness and homotheticity - and that these two axioms are necessary and sufficient for independence. Thus, independence...

Persistent link: https://www.econbiz.de/10010430733

Behavioral economics, happiness surveys, and public policy

Adler, Matthew D. - In: Journal of benefit-cost analysis : JBCA 7 (2016) 1, pp. 196-219

Persistent link: https://www.econbiz.de/10011569106

Chapter 5 The Economic Theory of Gift-Giving: Perfect Substitutability of Transfers and Redistribution of Wealth

Mercier Ythier, Jean - In: Handbook of the economics of giving, altruism and …, (pp. 227-369). 2006

This chapter reviews the theory of the voluntary public and private redistribution of wealth elaborated by economic … analysis in the last forty years or so. The central object of the theory is altruistic gift-giving, construed as benevolent … voluntary redistribution of income or wealth. The theory concentrates on lump-sum voluntary transfers, individual or collective …

Persistent link: https://www.econbiz.de/10014023678

Ambiguity revealed

Bayer, Ralph-C.; Bose, Subir; Polisson, Matthew; Renou, … - 2013

We derive necessary and sufficient conditions for data sets composed of state-contingent prices and consumption to be consistent with two prominent models of decision making under uncertainty: variational preferences and smooth ambiguity. The revealed preference conditions for subjective...

Persistent link: https://www.econbiz.de/10009725525