Time Inconsistency and Retirement Choice

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 the choice of when to retire, then naïve hyperbolic discounters may borrow far less and start saving for retirement significantly earlier than exponential discounters.

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Year of publication:	2015
Authors:	Findley, T. Scott ; Caliendo, Frank N.
Publisher:	Munich : Center for Economic Studies and ifo Institute (CESifo)
Subject:	hyperbolic discounting \| naiveté \| retirement choice \| time inconsistency \| life-cycle consumption and saving

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Series:	CESifo Working Paper ; 5208
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	818567775 [GVK] hdl:10419/107300 [Handle] RePec:ces:ceswps:_5208 [RePEc]
Classification:	C61 - Optimization Techniques; Programming Models; Dynamic Analysis ; D03 - Behavioral Economics; Underlying Principles ; D91 - Intertemporal Consumer Choice; Life Cycle Models and Saving
Source:	EconStor

Persistent link: https://www.econbiz.de/10010480816