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- Title
Ambiguity and the Excess Consumption Growth Puzzle.
- Authors
Balagyozyan, Aram; Giannikos, Christos
- Abstract
Using a two-period non-stochastic life-cycle model, Hauenschild and Stahlecker (2001) show that when information about future labor income is ambiguous, individuals may engage in precautionary savings even if their marginal utility is not convex. We extend the methodology of Houenschild and Stahlecker to a model with standard preferences and demonstrate the precautionary savings that consumers accumulate due to ambiguity and fuzzy decision-making possibly explain the "excess consumption growth puzzle".
- Subjects
CONSUMPTION (Economics); PUZZLES; INCOME; MARGINAL utility; FUZZY decision making
- Publication
International Journal of Business & Economics, 2018, Vol 17, Issue 1, p5
- ISSN
1543-1614
- Publication type
Article