Economics at your fingertips  

Precautionary Saving in the Laboratory

T. Ballinger (), M.G. Palumbo and Nathaniel Wilcox ()

Working Papers from Houston - Department of Economics

Abstract: This paper analyzes data generated from economics experiments in which individuals make a series of "life cycle" saving decisions in the face of random income realizations. We directly measure the extent to which subjects' decisions align with predictions based on the standard theoretical framework of intertemporal optimization with rational expectations. We investigate results from two experimental treatments representing problems of different complexity. Additionally, we discern how much learning contributes to rational decision-making in the context of this economic problem and, by introducing a novel experimental design, we focus on the ability of subjects to learn from one another through explicit verbal communication. Indeed, we find significant movements toward intertemporal optimization in subject decision-making after communication with previous players. However, communication between three "generations" of experience is insufficient to yield intertemporally optimal saving decisions among the latest experimental cohort.

Keywords: DECISION; MAKING (search for similar items in EconPapers)
JEL-codes: D80 D81 (search for similar items in EconPapers)
Pages: 37 pages
Date: 1998
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in Working Papers from Houston - Department of Economics UNIVERSITY OF HOUSTON, DEPARTMENT OF ECONOMICS, COLLEGE OF SOCIAL SCIENCES, HOUSTON TEXAS 77023 U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Krichel ().

Page updated 2023-03-26
Handle: RePEc:fth:housto:98-04