Scenario-Based Satisficing in Saving:A Theoretical and Experimental Analysis

Contrary to the models of deterministic life cycle saving, we take itfor granted that uncertainty of one's future is the essential problem ofsaving decisions. However, unlike the stochastic life cycle models, we capturethis crucial uncertainty by a non-Bayesian scenario-based satisficingapproach. Decision makers first form aspirations for a few relevant scenarios,and then search for saving plans satisficing these aspirations. Inaddition to formally specifying scenario-based satisficing in saving, we exploreit experimentally. The results confirm that optimal intertemporalallocations are difficult to derive, and suggest that satisficing allocationscan be reached easily when aspirations are incentivized.