Life cycle saving: Insights from the perspective of bounded rationality

Johannes Binswanger ()

European Economic Review, 2012, vol. 56, issue 3, 605-623

Abstract: This paper provides a new life cycle model that takes into account key elements of bounded rationality. The paper shows that the model can account for patterns in the data that are hard to explain by the standard life cycle model. Among other patterns, the model predicts that, typically, the young either hold no equity or their equity portfolio share is rather low and then increases over working life. The analytical solution of the model demonstrates its high degree of tractability.

Keywords: Behavioral economics; Bounded rationality; Feasibility goals; Hierarchical decision making; Life cycle saving; Portfolio choice (search for similar items in EconPapers)
JEL-codes: D81 D91 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:56:y:2012:i:3:p:605-623

DOI: 10.1016/j.euroecorev.2012.01.003

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