Self-Attribution Bias and Consumption
AbstractIn this paper I examine the implications of self-attribution bias on consumption and savings decisions. When self-attributive learning replaces rational expectations in a model of intertemporal choice, two departures from the permanent-income hypotheses manifest. One is that consumers tend to under-save early in life. Another is a relatively high degree of covariance between changes in consumption and changes in income. No other factor on its own has been able to explain both of these empirical anomalies that the permanent-income hypothesis has faced.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 50314.
Date of creation: 30 Sep 2013
Date of revision:
Cognative Biases; Uncertainty; Consumption; Saving;
Find related papers by JEL classification:
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-10-05 (All new papers)
- NEP-CBE-2013-10-05 (Cognitive & Behavioural Economics)
- NEP-MAC-2013-10-05 (Macroeconomics)
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