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The psychological cost of saving – an agent-based modelling approach

Elena Druica, Rodica Ianole () and Viorel Cornescu ()
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Rodica Ianole: University of Bucharest,Faculty of Business and Administration,Bucharest,Romania
Viorel Cornescu: University of Bucharest,Faculty of Business and Administration,Bucharest,Romania

Romanian Journal of Economics, 2014, vol. 39, issue 2(48), 34-48

Abstract: In this paper, an alternative hypothesis to the standard economic models of saving is proposed, based on new research in behavioral and computational economic. The importance of traditional factors of influence for saving is acknowledged, but the explanatory spectrum is extended by focusing on the conformity variable. If each individual from a specific group may initially have a low propensity to consume (and implicitly a high propensity to save), under group dynamics and direct/indirect group pressure all the individuals may change their behavior, leading to a new group mainly characterized by a propensity to consume. The hypothesis was validated by using NetLogo simulations, finding that saving behavior is bind by a psychological cost which has the potential to switch the individuals’ focus from a saving philosophy centered on benefits, to a philosophy centered on costs.

Keywords: agent-based model; saving behavior; behavioral economics; social conformity. (search for similar items in EconPapers)
JEL-codes: C63 D03 D14 (search for similar items in EconPapers)
Date: 2014
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Handle: RePEc:ine:journl:v:39:y:2014:i:48:p:34-48