An Experimental Study of Decisions in Dynamic Optimization Problems
AbstractIn this paper we use an experimental approach to study the decisions of human subjects who are given cash incentives to solve a particular representative agent dynamic model widely studied in macroeconomics. In a representative agent dynamic model, an economy is modelled as a single decision maker, who maximizes the discounted utility of consumption over the appropriate time horizon. The assupmtion of a single decision maker in the economy removes complications resulting from the existence of multiple agents, such as inefficiencies resulting from strategic behavior or externalities, and technical difficulties arising from the aggregation of preferences.
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Bibliographic InfoPaper provided by Purdue University, Department of Economics in its series Purdue University Economics Working Papers with number 1110.
Length: 43 pages
Date of creation: Mar 1998
Date of revision:
OPTIMIZATION ; DECISION MAKING ; MACROECONOMICS;
Other versions of this item:
- Kenneth Matheny & Charles Noussair, 2000. "An experimental study of decisions in dynamic optimization problems," Economic Theory, Springer, vol. 15(2), pages 389-419.
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
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