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Title:Scenario-based satisficing in saving: a theoretical and experimental analysis PDF Logo
Authors:Güth, Werner
Levati, Maria Vittoria
Ploner, Matteo
Issue Date:2007
Series/Report no.:Jena economic research papers 2007,049
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
Appears in Collections:Jena Economic Research Papers, MPI für Ökonomik

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