Self-Attribution Bias and Consumption

Jesse Zinn

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper I examine the implications of self-attribution bias on consumption and savings decisions. When self-attributive learning replaces rational expectations in a model of intertemporal choice, two departures from the permanent-income hypotheses manifest. One is that consumers tend to under-save early in life. Another is a relatively high degree of covariance between changes in consumption and changes in income. No other factor on its own has been able to explain both of these empirical anomalies that the permanent-income hypothesis has faced.

Keywords: Cognative Biases; Uncertainty; Consumption; Saving (search for similar items in EconPapers)
JEL-codes: D03 E21 (search for similar items in EconPapers)
Date: 2013-09-30
New Economics Papers: this item is included in nep-cbe and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:50314

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