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We show how optimal saving in a two-period model is affected when prudence and risk aversion of the underlying utility function change. Increasing prudence alone will induce higher savings only if, for certain combinations of the interest rate and the pure time discount rate, there is...
Persistent link: https://www.econbiz.de/10003772158
In public good games, voluntary contributions tend to start off high and decline as the game is repeated. If high contributors are matched, however, contributions tend to stay high. We propose a formalization predicting that high contributors will self-select into groups committed to charitable...
Persistent link: https://www.econbiz.de/10003850332
It has been argued that increased life expectancy raises the rate of return on education, causing a rise in the investment in education followed by an increase in lifetime labor supply. Empirical evidence of these relations is rather weak. Building on a lifecycle model with uncertain longevity,...
Persistent link: https://www.econbiz.de/10003883894
This paper considers family formation and reciprocity-based cooperation in the form of sharing of earnings-risk. While risk sharing is one benefit to marriage it is also limited by divorce risk. With search in the marriage market there may be multiple equilibria diering not only in divorce rates...
Persistent link: https://www.econbiz.de/10011399734
This paper introduces a model of limited consumer attention into an otherwise standard new trade theory model with love-of-variety preferences and heterogeneous firms. In this setting, we show that trade liberalization needs not be welfare enhancing if the consumers' capacity to gather and...
Persistent link: https://www.econbiz.de/10009722394
This paper analyzes a closed, essentially linear polycentric city with homogenous households who probabilistically select their workplace and residence locations. The study utilizes a continuous logit model to describe household location choices. In contrast to the classic urban model with...
Persistent link: https://www.econbiz.de/10010229855
According to the endowment effect there is some discomfort associated with giving up a good, that is to say, we are willing to give up something only if the price is greater than the price we are willing to pay for it. This implies that the indifference curves should designate a reference point...
Persistent link: https://www.econbiz.de/10010370273
We explore effects of simultaneous price changes for the demand of a group of goods, which we refer to as a compound commodity. Specifically, we consider unit and proportional cost components (e. g., taxes, transportation costs, etc.) imposed on the compound commodity. We find that there is a...
Persistent link: https://www.econbiz.de/10011523742
When individuals choose from whatever alternatives available to them the one that maximizes their utility then it is always desirable that the government provide them with as many alternatives as possible. Individuals, however, do not always choose what is best for them and their mistakes may be...
Persistent link: https://www.econbiz.de/10011505924
The literature on household behavior contains hardly any empirical research on the withinhousehold distributional effect of tax-benefit policies. We simulate this effect in the framework of a collective model of labor supply when shifting from a joint to an individual taxation system in France....
Persistent link: https://www.econbiz.de/10011509519