Feigenbaum, James; Caliendo, Frank N.; Gahramanov, Emin - In: Journal of Economic Behavior & Organization 77 (2011) 3, pp. 285-303
Contrary to the usual presumption that welfare in markets is maximized if consumers behave rationally, we show in a two-period overlapping generations model that there always exists an irrational consumption rule that can weakly improve upon the lifecycle/permanent-income rule in general...