Scenario-Based Satisficing in Saving: A Theoretical and Experimental Analysis
AbstractContrary to the models of deterministic life cycle saving, we take it for granted that uncertainty of one's future is the essential problem of saving decisions. However, unlike the stochastic life cycle models, we capture this crucial uncertainty by a non-Bayesian scenario-based satisï¬cing approach. Decision makers ï¬rst form aspirations for a few relevant scenarios, and then search for saving plans satisï¬cing these aspirations. In addition to formally specifying scenario-based satisï¬cing in saving, we explore it experimentally. The results conï¬rm that optimal intertemporal allocations are diffcult to derive, and suggest that satisï¬cing allocations can be reached easily when aspirations are incentivized.
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Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2007-049.
Date of creation: 22 Aug 2007
Date of revision:
Intertemporal allocation decisions; Bayesian updating; Satisï¬cing behavior;
Find related papers by JEL classification:
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D90 - Microeconomics - - Intertemporal Choice and Growth - - - General
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- Werner Güth, 2009. "Optimal gelaufen, einfach zufrieden oder unüberlegt gehandelt? Zur Theorie (un)eingeschränkt rationalen Entscheidens," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 10(s1), pages 75-100, 05.
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