Showing 1 - 10 of 199
An axiomatic construction for lifecycle preferences accounting for the finiteness and the randomness of life duration is provided. We emphasize the role of intertemporal correlation aversion and explain why multiplicative preferences provide an interesting alternative to additive preferences,...
Persistent link: https://www.econbiz.de/10014174704
Consumption growth is predictable, a basic violation of the permanent-income hypothesis. This paper examines three possible explanations: rule-of-thumb behavior, in which households allow consumption to track per-period income flows rather than permanent income; habit persistence; and...
Persistent link: https://www.econbiz.de/10014222407
With the decline of defined benefit (DB) pension plans, there has been some renewed interest in providing other annuity income options to American workers, but demand for annuities has remained low in the United States. To develop future annuity income solutions, it is important to understand...
Persistent link: https://www.econbiz.de/10012963108
Designing efficient environmental policies requires knowledge about households' preference parameters for their intertemporal decisions. By conducting an original Internet-based survey using Japanese participants (n=2,906) and a follow-up survey (n=1,407), we examine how people evaluate...
Persistent link: https://www.econbiz.de/10012946352
In most medical decisions probabilities are ambiguous and not objectively known. Empirical evidence suggests that people's preferences are affected by ambiguity. Health economic analyses generally ignore ambiguity preferences and assume that they are the same as preferences under risk. We show...
Persistent link: https://www.econbiz.de/10012949923
We introduce and characterize a recursive model of dynamic choice that accommodates naiveté about present bias. The model incorporates costly self-control in the sense of Gul and Pesendorfer (2001) to overcome the technical hurdles of the Strotz representation. The important novel condition is...
Persistent link: https://www.econbiz.de/10012950018
This article investigates the effects of small proportional transaction costs on lifetime consumption and portfolio decisions. The extant literature has focused on agents with additive utility; here, we argue that this is essentially without loss of generality at the leading order for small...
Persistent link: https://www.econbiz.de/10012956133
In this paper, we study two classical saving-insurance problems for the intertemporal version developed by Hayashi and Miao (2011) of the smooth ambiguity model of Klibanoff et al. (2005). These models put risk, ambiguity and time preferences together in a Kreps-Porteus aggregator, and...
Persistent link: https://www.econbiz.de/10013032945
This paper re-examines precautionary saving with general Selden/Kreps-Porteus preferences. The conditions existing in the literature are much more complex than in the Expected Utility framework. We obtain a simple and intuitive result on precautionary savings via disentangling time preference...
Persistent link: https://www.econbiz.de/10013033341
Consumers with limited discretionary money face important trade-offs when deciding how to spend it. In the current research, we suggest that feelings of financial constraint increase consumers' concern about the lasting utility of their purchases, which in turn increases their preference for...
Persistent link: https://www.econbiz.de/10013035220