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A Tractable Model of Buffer Stock Saving

Carroll, Christopher D. - 2010

We present a tractable model of the effects of nonfinancial risk on intertemporal choice. Our purpose is to provide a simple framework that can be adopted in fields like representative-agent macroeconomics, corporate finance, or political economy, where most modelers have chosen not to...

Persistent link: https://www.econbiz.de/10013151146

Do Lottery Payments Induce Savings Behavior : Evidence from the Lab

Filiz-Ozbay, Emel - 2013

This paper presents the results of a laboratory experiment designed to investigate whether the option of a Prize Linked … Savings (PLS) product alters the likelihood that subjects choose to delay payment. By comparing PLS and standard savings … men, self-reported lottery players, and subjects with low bank account balances. We use the results of our experiment to …

Persistent link: https://www.econbiz.de/10013080409

Confidence and the Propagation of Demand Shocks

Angeletos, Marios; Lian, Chen - 2022

We revisit the question of why shifts in aggregate demand drive business cycles. Our theory combines intertemporal substitution in production with rational confusion, or bounded rationality, in consumption and investment. The first element allows aggregate supply to respond to shifts in...

Persistent link: https://www.econbiz.de/10013297586

Thinking Ahead : The Decision Problem

Bolton, Patrick; Faure-Grimaud, Antoine - 2021

individual decision maker%u2019s thinking process as a thought-experiment that takes time and let the decision maker %u201Cthink …

Persistent link: https://www.econbiz.de/10013224897

Defaults and Attention : The Drop Out Effect

Caplin, Andrew - 2012

When choice options are complex, policy makers may seek to reduce decision making errors by making a high quality option the default. We show that this positive effect is at risk because such a policy creates incentives for decision makers to "drop out" by paying no attention to the decision and...

Persistent link: https://www.econbiz.de/10013107764

Estimating Dynamic Discrete Choice Models with Hyperbolic Discounting, with an Application to Mammography Decisions

Fang, Hanming - 2010

We extend the semi-parametric estimation method for dynamic discrete choice models using Hotz and Miller's (1993) conditional choice probability (CCP) approach to the setting where individuals may have hyperbolic discounting time preferences and may be naive about their time inconsistency. We...

Persistent link: https://www.econbiz.de/10013137310

Risk Preferences are Not Time Preferences : Discounted Expected Utility with a Disproportionate Preference for Certainty

Andreoni, James - 2010

Risk and time are intertwined. The present is known while the future is inherently risky. Discounted expected utility provides a simple, coherent structure for analyzing decisions in intertemporal, uncertain environments. However, we document robust violations of discounted expected utility,...

Persistent link: https://www.econbiz.de/10013138320

The Welfare Cost of Retirement Uncertainty

Caliendo, Frank - 2016

Uncertainty about the timing of retirement is a major financial risk with implications for decision making and welfare over the life cycle. We estimate that the standard deviation of the difference between retirement expectations and actual retirement dates ranges from 4.28 to 6.92 years. We...

Persistent link: https://www.econbiz.de/10012983656

Boundedly Rational Dynamic Programming : Some Preliminary Results

Gabaix, Xavier - 2012

A key open question in economics is the practical, portable modeling of bounded rationality. In this short note, I report ongoing progress that is more fully developed elsewhere. I present some results from a new model in which the decision-maker builds a simplified representation of the world....

Persistent link: https://www.econbiz.de/10013110191

Behavioral Macroeconomics Via Sparse Dynamic Programming

Gabaix, Xavier - 2016

more, generating realistic dynamics. In the consumption-savings model, the consumer decides to pay little or no attention …

Persistent link: https://www.econbiz.de/10013001781