Munich Personal RePEc Archive

Self-Attribution Bias and Consumption

Zinn, Jesse (2013): Self-Attribution Bias and Consumption.

[img]
Preview
PDF
MPRA_paper_50314.pdf

Download (356kB) | Preview

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.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.