Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/25617 
Year of Publication: 
2007
Series/Report no.: 
Jena Economic Research Papers No. 2007,049
Publisher: 
Friedrich Schiller University Jena and Max Planck Institute of Economics, Jena
Abstract: 
Contrary to the models of deterministic life cycle saving, we take it for granted that uncertainty of one's future is the essential problem of saving decisions. However, unlike the stochastic life cycle models, we capture this crucial uncertainty by a non-Bayesian scenario-based satisficing approach. Decision makers first form aspirations for a few relevant scenarios, and then search for saving plans satisficing these aspirations. In addition to formally specifying scenario-based satisficing in saving, we explore it experimentally. The results confirm that optimal intertemporal allocations are diffcult to derive, and suggest that satisficing allocations can be reached easily when aspirations are incentivized.
Subjects: 
Intertemporal allocation decisions
Bayesian updating
Satisficing behavior
JEL: 
C91
D81
D90
Document Type: 
Working Paper

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