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Estimating Risk Preferences in the Presence of Bifurcated Wealth Dynamics : Do We Misattribute Dynamic Risk Responses to Static Risk Aversion?
Lybbert, Travis J. - 2011
Estimating risk preferences is tricky because controlling for confounding factors is difficult. Omitting or imperfectly controlling for these factors can attribute too much observable behavior to risk aversion and bias estimated preferences. Agents often modify risky decisions in response to...
Persistent link: https://www.econbiz.de/10013125024
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Can Robbery and Other Theft Help Explain the Textbook Currency-Demand Puzzle? Two Dreadful Models of Money Demand with an Endogenous Probability of Crime
Hannsgen, Greg - 2008
This paper attempts to explain one version of an empirical puzzle noted by Mankiw (2003): a Baumol-Tobin inventory-theoretic money demand equation predicts that the average U.S. adult should have held approximately $551.05 in currency and coin in 1995, while data show an average of $100. The...
Persistent link: https://www.econbiz.de/10012725180
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Can robbery and other theft help explain the textbook currency-demand puzzle? : Two dreadful models of money demand with an endogenous probability of crime
Hannsgen, Greg (contributor) - 2008
This paper attempts to explain one version of an empirical puzzle noted by Mankiw (2003): a Baumol-Tobin inventory-theoretic money demand equation predicts that the average adult American should have held approximately $551.05 in currency and coin in 1995, while data show an average of $100. The...
Persistent link: https://www.econbiz.de/10003727279
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Income Risk, Precautionary Saving, and Loss Aversion – An Empirical Test
Ibanez, Marcela; Schneider, Sebastian O. - 2021
This paper empirically examines the behavioral precautionary saving hypothesis by Koszegi and Rabin (2009) stating that uncertainty about future income triggers saving because of loss aversion. We extend their theoretical analysis to also consider the internal margin, i.e., the strength, of loss...
Persistent link: https://www.econbiz.de/10013243502
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A General Approach to Estimating Random Preference Models of Risk Attitudes
Lau, Morten; Yoo, Hong Il - 2023
behavior, by attributing this heterogeneity to preference parameters in the underlying theory of risk attitudes instead of an … additive error term that is external to the theory. However, most empirical studies in structural estimation of risk attitudes … decision theory, types of lottery pairs, and parametric distribution of unobserved heterogeneity …
Persistent link: https://www.econbiz.de/10014351166
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Hyperbolic discounting can be good for your health
Strulik, Holger; Trimborn, Timo - 2018
It has been argued that hyperbolic discounting of future gains and losses leads to time-inconsistent behavior and thereby, in the context of health economics, not enough investment in health and too much indulgence of unhealthy consumption. Here, we challenge this view. We set up a life-cycle...
Persistent link: https://www.econbiz.de/10011782440
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Consumption and wage humps in a life-cycle model with education
Kraft, Holger; Munk, Claus; Seifried, Frank Thomas; … - 2014
The observed hump-shaped life-cycle pattern in individuals' consumption cannot be explained by the classical consumption-savings model. We explicitly solve a model with utility of both consumption and leisure and with educational decisions affecting future wages. We show optimal consumption is...
Persistent link: https://www.econbiz.de/10010365130
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Confronting the Robinson Crusoe Paradigm with Household-Size Heterogeneity
Koulovatianos, Christos - 2008
Modern macroeconomics empirically addresses economy-wide incentives behind economic actions by using insights from the way a single representative household would behave. This analytical approach requires that incentives of the poor and the rich are strictly aligned. In empirical analysis a...
Persistent link: https://www.econbiz.de/10012770249
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Consumption and Credit : A Model of Time-Varying Liquidity Constraints
Ludvigson, Sydney C. - 2008
This paper studies the optimal consumption behavior of individuals who face borrowing limitations that vary stochastically with their income. This framework is motivated by new empirical evidence that I document in U.S. aggregate data: predictable growth in consumer credit is significantly...
Persistent link: https://www.econbiz.de/10012775015
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Hyperbolic discounting can be good for your health
Strulik, Holger; Trimborn, Timo - 2016
It has been argued that hyperbolic discounting of future gains and losses leads to time-inconsistent behavior and thereby, in the context of health economics, not enough investment in health and too much indulgence of unhealthy consumption. Here, we challenge this view. We set up a life-cycle...
Persistent link: https://www.econbiz.de/10011576335