Saving Behavior under the Influence of Income Risk: An Experimental Study

Tomoki Kitamura (), Yasuhiro Yonezawa () and Munenori Nakasato ()
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Tomoki Kitamura: NLI-Research Institute and Graduate School of International Management, Aoyama Gakuin University
Yasuhiro Yonezawa: Graduate School of Finance, Accounting and Law, Waseda University
Munenori Nakasato: Graduate School of International Management, Aoyama Gakuin University

Economics Bulletin, 2010, vol. 30, issue 2, 967-974

Abstract: Individual subjects are experimentally tested for precautionary saving. We use a simplified experimental framework and decision supporting tool to show that subject's consumption is consistent with precautionary saving. We find that subjects overact in changing current income. However, those over-reactions cancel each other, and subject's consumption behavior is close to the optimal solutions on average.

Keywords: Precautionary Saving; Experiment (search for similar items in EconPapers)
JEL-codes: D1 (search for similar items in EconPapers)
Date: 2010-04-01
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