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An Experimental Analysis of Intertemporal Allocation Behavior

Author

Listed:
  • Vital Anderhub

    (Humboldt University at Berlin)

  • Werner Güth

    (Humboldt University at Berlin)

  • Wieland Müller

    (Humboldt University at Berlin)

  • Martin Strobel

    (Humboldt University at Berlin)

Abstract

If the future is uncertain, optimal intertemporal decisions rely on anticipating one's own optimal future behavior as is typical in dynamic programming. Our aim is to detect experimentally stylized facts about intertemporal decision making in a rich stochastic environment. Compared to previous experimental studies our experimental design is more complex since the time horizon is uncertain and termination probabilities have to be updated. In particular the decision task is non-stationary as in real life which seriously complicates the task of diagnosing behavioral regularities. In this study we give some illustrative results and provide some general perspectives. Our main result is that subjects'reaction to information about termination probablilities are qualitatively correct.

Suggested Citation

  • Vital Anderhub & Werner Güth & Wieland Müller & Martin Strobel, 2000. "An Experimental Analysis of Intertemporal Allocation Behavior," Experimental Economics, Springer;Economic Science Association, vol. 3(2), pages 137-152, October.
    • Handle: RePEc:kap:expeco:v:3:y:2000:i:2:d:10.1023_a:1026589319018
    DOI: 10.1023/A:1026589319018
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    Cited by:

    1. Grüner, S. & Hirschauer, N. & Mußhoff, O., 2015. "Potenzial verschiedener experimenteller Designs für die Politikfolgenabschätzung," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 50, March.
    2. Vital Anderhuba & Dennis A. V. Dittrich & Werner Güth & Nadege Marchandd, "undated". "Interpersonal allocation behavior in a household saving experiment," Papers on Strategic Interaction 2002-02, Max Planck Institute of Economics, Strategic Interaction Group.
    3. Anderhub, Vital & Muller, Rudolf & Schmidt, Carsten, 2001. "Design and evaluation of an economic experiment via the Internet," Journal of Economic Behavior & Organization, Elsevier, vol. 46(2), pages 227-247, October.
    4. 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.
    5. Clithero, John A., 2018. "Response times in economics: Looking through the lens of sequential sampling models," Journal of Economic Psychology, Elsevier, vol. 69(C), pages 61-86.
    6. Thomas Epper & Ernst Fehr & Helga Fehr-Duda & Claus Thustrup Kreiner & David Dreyer Lassen & Søren Leth-Petersen & Gregers Nytoft Rasmussen, 2020. "Time Discounting and Wealth Inequality," American Economic Review, American Economic Association, vol. 110(4), pages 1177-1205, April.
    7. 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, May.
    8. Fischbacher, Urs & Thöni, Christian, 2008. "Excess entry in an experimental winner-take-all market," Journal of Economic Behavior & Organization, Elsevier, vol. 67(1), pages 150-163, July.
    9. Duffy, John & Li, Yue, 2019. "Lifecycle consumption under different income profiles: Evidence and theory," Journal of Economic Dynamics and Control, Elsevier, vol. 104(C), pages 74-94.
    10. Tetsuo Yamamori & Kazuyuki Iwata & Akira Ogawa, 2020. "Effect of Longevity on Saving Behavior: An Experimental Study on the Simple Intertemporal Life-Cycle Problem," Working Papers e153, Tokyo Center for Economic Research.
    11. John Duffy, 2022. "Why macroeconomics needs experimental evidence," The Japanese Economic Review, Springer, vol. 73(1), pages 5-29, January.
    12. Feltovich, Nick & Ejebu, Ourega-Zoé, 2014. "Do positional goods inhibit saving? Evidence from a life-cycle experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PB), pages 440-454.
    13. Bachmann, Kremena & Lot, Andre & Xu, Xiaogeng & Hens, Thorsten, 2023. "Experimental Research on Retirement Decision-Making: Evidence from Replications," Journal of Banking & Finance, Elsevier, vol. 152(C).
    14. Yamamori, Tetsuo & Iwata, Kazuyuki & Ogawa, Akira, 2018. "Does money illusion matter in intertemporal decision making?," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 465-473.

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