Dynamic decision making with feasibility goals: A procedural-rationality approach
Binswanger,J.
Binswanger,J.
Abstract
This paper proposes a new framework of intertemporal choice: decision making by means of so-called feasibility goals. These refer to the feasibility of certain target levels of consumption associated with specific future benchmark scenarios. The feasibility goals framework takes into account bounded/procedural rationality without stepping outside the realm of an optimization framework. The paper has two aims. First, it provides a general characterization of the feasibility goals framework. Second, it provides a simple life cycle model with feasibility goals to illustrate the applicability of the concept. The life cycle model is promising for better understanding individual portfolio choice.
Description
Appeared earlier as CentER DP 2008-14 (rt)
Date
2011
Journal Title
Journal ISSN
Volume Title
Publisher
Research Projects
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Journal Issue
Keywords
feasibility goals, planning, bounded/procedural rationality, life cycle saving, portfolio choice, D03 - Behavioral Microeconomics ; Underlying Principles, D81 - Criteria for Decision-Making under Risk and Uncertainty, D91 - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
Citation
Binswanger, J 2011, 'Dynamic decision making with feasibility goals : A procedural-rationality approach', Journal of Economic Behavior and Organization, vol. 78, no. 3, pp. 219-228. https://doi.org/10.1016/j.jebo.2011.01.006