This paper studies the role of goal bracketing to attenuate time inconsistency. When setting non-binding goals for a multi-stage project, an agent must also decide how and when to evaluate himself against such goals. In particular, he can bracket broadly by setting an aggregate goal for the...

A large body of literature suggests that consumers derive utility from gains and losses relative to a reference point. This paper shows that such reference dependence can affect savings in opposite directions depending on whether people face liquidity constraints. Existing models for wealth and...

A life-cycle savings model was tested to analyze consumption patterns of elderly U.S. households, using the 1990 and 1991 BLS Interview Survey of Consumer Expenditures. The model implies substantial, planned decreases in consumption after retirement, regardless of income patterns. The empirical...

Positive household finance attempts to describe, explain, and perhaps predict behavior. Some researchers have analyzed household survey data to estimate household preferences, which then could be used as the basis for prescriptions for household behavior. In order to prescribe actions or...

German Abstract: Vor kurzem haben Vertreter deutscher Banken damit begonnen eine Kampagne gegen deutsche Sparer zu initiieren. Nachdem sie von der EZB für dortige Sichteinlagen mit einem negativen Strafzins belegt wurden, um sie zu einer stärkeren Kreditvergabe zu bewegen statt Liquidität bei...

At the end of the deferment period a deferred annuity's policyholder can choose between receiving annuity payouts or the capital accumulated. Considering stochastic mortality improvements, this is a valuable option for the policyholder. Whenever mortality improves less than expected at contract...

Economists conducting normative analyses of household financial decisions typically assume specific values of parameters of the household utility function. We review 12 normative analyses and discuss justifications for the personal discount rates assumed. None of the normative articles cited an...

Despite the graying of the world population and increasing relevance of decision competence across the life span, scant research has focused on whether or how reward processing and risky decision making may change across adulthood. Here, we review studies that have examined how age influences...

I solve the life-cycle portfolio allocation problem of a disappointment averse (DA) agent. DA agents overweight disappointing outcomes. Unlike expected utility investors, DA investors drastically cut their allocation to stocks around retirement due to a distinct effect associated with the drop...

In fifteen European countries, China, and the US, stocks and business equity as a share of total household assets are represented by an increasing and convex function of income/wealth. A parsimonious model fitted to the data shows why background labor-income risk can explain much of this...