Kimball (1990a,b) established that income risk increases the marginal propensity to consume if and only if absolute prudence decreases. We characterize decreasing and increasing multivariate prudence and show that a multidimensional risk increases the marginal propensity to consume if and only...

We show that a steeply increasing workload before a deadline is compatible with time-consistent preferences. The key departure from the literature is that we consider a stochastic environment where success of effort is not guaranteed.

This letter develops a set of simple conditions under which an individual is willing to save an extra amount of money due to the presence of ambiguity concerning his second period wealth. This extra precautionary saving motive is naturally associated with the notion of ambiguity prudence.

We study multivariate prevention decisions by disentangling early and late prevention. We show how the modularity of prevention and several measures of prevention efficiency interact with the agent’s risk attitude. We derive comparative statics with respect to impatience, loss severity, and...

I study a single-agent dynamic purchase problem by using a Gul and Pesendorfer’s [Gul, F., Pesendorfer, W., 2007. Harmful addiction. Review of Economic Studies 74 (1), 147–172] dynamic preference: extreme self-control cannot be sustained and leads to addiction. This type of agent exhibits...

Abstract This study presents results of the validation of an ultra-short survey measure of patience included in the German Socio-Economic Panel (SOEP). Survey responses predict intertemporal choice behavior in incentive-compatible decisions in a representative sample of the German adult population.

We use micro level retail price data from convenience stores to study the link between 0-ending price points and price rigidity during a period of a runaway inflation, when the annual inflation rate was in the range of 60%–430%. Surprisingly, we find that more round prices are less likely to...

We study financial risk taking via standard and sophisticated financial investments. Using survey data on 2,047 individuals, we find that standard investments are strongly associated with both actual and perceived financial literacy for men, but only with actual literacy for women. Sophisticated...

Hyperbolic discounting with naiveté is widely believed to provide a better explanation than exponential discounting of why people borrow so much and why they wait so long to save for retirement. We reach a different set of conclusions. We show that if financial planning is enriched to include...