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Self-Attribution Bias and Consumption

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  • Zinn, Jesse

Abstract

In 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.

Suggested Citation

  • Zinn, Jesse, 2013. "Self-Attribution Bias and Consumption," MPRA Paper 50314, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:50314
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    References listed on IDEAS

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    More about this item

    Keywords

    Cognative Biases; Uncertainty; Consumption; Saving;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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