Precautionary saving and fuzzy information *
نویسندگان
چکیده
We consider a two-period life-cycle model where uncertainty about future labour income is modelled by a fuzzy set. Applying a defuzzification strategy that explicitly takes the individual’s behaviour towards risk into account, we show that pessimistic individuals engage in precautionary savings even if marginal utility is not convex, e.g. in case of a quadratic utility function. 2001 Elsevier Science B.V. All rights reserved.
منابع مشابه
Connecting possibilistic prudence and optimal saving
— In this paper we study the optimal saving problem in the framework of possibility theory. The notion of possibilistic precautionary saving is introduced as a measure of the way the presence of possibilistic risk (represented by a fuzzy number) influences a consumer in establishing the level of optimal saving. The notion of prudence of an agent in the face of possibilistic risk is defined and ...
متن کاملA Possibilistic and Probabilistic Approach to Precautionary Saving
This paper proposes two mixed models to study a consumer’s optimal saving in the presence of two types of risk: income risk and background risk. In the first model, income risk is represented by a fuzzy number and background risk by a random variable. In the second model, income risk is represented by a random variable and background risk by a fuzzy number. For each model, three notions of prec...
متن کاملPrecautionary Saving and Consumption Smoothing Across Time and Possibilities.
This paper examines how aversion to risk and aversion to intertemporal substitution determine the strength of the precautionary saving motive in a two-period model with Selden/Kreps-Porteus preferences. For small risks, we derive a measure of the strength of the precautionary saving motive which generalizes the concept of "prudence" introduced by Kimball (1990b). For large risks, we show that d...
متن کاملPrecautionary Saving and Consumption Smoothing
This paper examines how aversion to risk and aversion to intertemporal substitution determine the strength of the precautionary saving motive in a two-period model with Selden/Kreps-Porteus preferences. For small risks, we derive a measure of the strength of the precautionary saving motive which generalizes the concept of “prudence” introduced by Kimball [12]. For large risks, we show that decr...
متن کاملPrecautionary saving and partially observed income $
I propose an intertemporal precautionary saving model in which the agent’s labor income is subject to (possibly correlated) shocks with different degrees of persistence and volatility. However, he only observes his total income, not individual components. I show that partial observability of individual components of income gives rise to additional precautionary saving due to estimation risk, th...
متن کامل