Towards Understanding Life Cycle Saving Of Boundedly Rational Agents: A Model With Feasibility Goals

Johannes Binswanger ()

No 2008-14, Discussion Paper from Tilburg University, Center for Economic Research

Abstract: This paper develops a new life cycle model that aims to describe the savings and asset allocation decisions of boundedly rational agents. The paper?s main theoretical contribution is the provision of a simple, tractable and parsimonious framework within which agents make forward looking decisions in the absence of full contingent planning. Instead, agents pursue two simple so-called feasibility goals. The paper uses this framework to shed light on important empirical patterns of asset allocation that are puzzling from the point of view of existing models.

JEL-codes: D81 D91 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe
Date: Written 2008
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