IDEAS home Printed from https://ideas.repec.org/a/ecj/econjl/v103y1993i416p1-20.html
   My bibliography  Save this article

Attainable Non-optimality or Unattainable Optimality: A New Approach to Stochastic Life Cycle Problems

Author

Listed:
  • Pemberton, James

Abstract

When future income is uncertain, the standard model of stochastic life cycle behavior does not provide an operatio nal basis for consumer choice because it is too complex to be solved either analytically or intuitively by the human brain (even if computer-assisted). This paper proposes an alternative model of intertemporal decision-making that takes full account of the future, including future uncertainty, but which is analytically tractable. T he model is applied to some illustrative examples. Copyright 1993 by Royal Economic Society.

Suggested Citation

  • Pemberton, James, 1993. "Attainable Non-optimality or Unattainable Optimality: A New Approach to Stochastic Life Cycle Problems," Economic Journal, Royal Economic Society, vol. 103(416), pages 1-20, January.
  • Handle: RePEc:ecj:econjl:v:103:y:1993:i:416:p:1-20
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0013-0133%28199301%29103%3A416%3C1%3AANOUOA%3E2.0.CO%3B2-Z&origin=bc
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. David Rae, 1997. "A forward-looking model of aggregate consumption in New Zealand," New Zealand Economic Papers, Taylor & Francis Journals, vol. 31(2), pages 199-220.
    2. Binswanger, J., 2008. "Towards Understanding Life Cycle Saving Of Boundedly Rational Agents : A Model With Feasibility Goals - Replaced by CentER Discussion Paper 2010-138," Discussion Paper 2008-14, Tilburg University, Center for Economic Research.
    3. Rae, David, 1996. "NBNZ-DEMONZ: A dynamic equilibrium model of New Zealand," Economic Modelling, Elsevier, vol. 13(1), pages 91-165, January.
    4. Jang, Insong, 2001. "Forward Looking Behavior And Empirical Household Consumption Function," Bonn Econ Discussion Papers 7/2001, University of Bonn, Bonn Graduate School of Economics (BGSE).
    5. Muller, Wieland, 2001. "Strategies, heuristics, and the relevance of risk-aversion in a dynamic decision problem," Journal of Economic Psychology, Elsevier, vol. 22(4), pages 493-522, August.
    6. Rodepeter, Ralf & Winter, Joachim, 1999. "Rules of thumb in life-cycle savings models," Sonderforschungsbereich 504 Publications 99-81, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    7. Pemberton, James, 1997. "Modelling and measuring income uncertainty in life cycle models," Economic Modelling, Elsevier, vol. 14(1), pages 81-98, January.
    8. Binswanger, J., 2010. "Towards Understanding Life Cycle Savings of Boundedly Rational Agents : A Model with Feasibility Goals (Revision of DP 2008-14)," Discussion Paper 2010-138, Tilburg University, Center for Economic Research.
    9. Hideaki Tamura & Yoichi Matsubayashi, 2014. "A New Solution to the Equity Premium Puzzle and the Risk-Free Rate Puzzle: Theory and Evidence," Discussion Papers 1422, Graduate School of Economics, Kobe University.
    10. Alho, Juha M., 2014. "Forecasting demographic forecasts," International Journal of Forecasting, Elsevier, vol. 30(4), pages 1128-1135.
    11. Binswanger, Johannes, 2011. "Dynamic decision making with feasibility goals: A procedural-rationality approach," Journal of Economic Behavior & Organization, Elsevier, vol. 78(3), pages 219-228, May.
    12. Binswanger, Johannes, 2012. "Life cycle saving: Insights from the perspective of bounded rationality," European Economic Review, Elsevier, vol. 56(3), pages 605-623.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecj:econjl:v:103:y:1993:i:416:p:1-20. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley-Blackwell Digital Licensing or Christopher F. Baum (email available below). General contact details of provider: https://edirc.repec.org/data/resssea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.