Does ‘price framing’ influence empirical estimates in Discrete Choice Experiments: The case study for the South African wine industry

The approach and survey used to examine non-market value in a stated preference study can influence the outcomes and impact the validity and reliability of value estimates. While prior research has investigated the impact of ‘price framing’ on decision-making in other disciplines, (i.e. marketing & psychology), little is known about its validity and reliability in […]

A Life-Cycle Model with Ambiguous Survival Beliefs

On average, young people underestimate whereas old people overestimate their chances to survive into the future. We adopt a Bayesian learning model of ambiguous survival beliefs which replicates these patterns. The model is em-bedded within a non-expected utility model of life-cycle consumption and saving. Our analysis shows that agents with ambiguous survival beliefs (i) save […]

Retirement Date Effects on Saving Behavior: The Case of Non-Separable Preferences

In this paper we demonstrate that the magnitude of the reaction of saving behavior to a change in the anticipated retirement date is largely determined by the degree to which utility is additively separable in consumption and leisure. We show that the relative decrease in saving in response to a later anticipated retirement date is […]

Financial Reforms and Consumption Behaviour in Malawi

The purpose of the study is to examine whether financial reforms implemented in the 1980’s and 1990’s altered the pattern of aggregate consumption behaviour in Malawi. More specifically, the study questions whether financial reforms affected consumption behaviour by reducing the excess sensitivity of changes in consumption to changes in current income using the Permanent income […]

Asset pricing in a Lucas ‘fruit-tree’ economy with non-additive beliefs

We study a Lucas (1978) “fruit-tree” economy under the assumption that agents are Choquet expected utility (CEU) rather than standard expected utility (EU) decision makers. The agents’ nonadditive beliefs about the economy’s stochastic dividend payment process may thus express ambiguity attitudes and accommodate violations of Savage’s sure-thing principle as elicited by Ellsberg (1961). As our […]

A parsimonious model of subjective life expectancy

This paper develops a theoretical model for the formation of subjective beliefs on individual survival expectations. Data from the Health and Retirement Study (HRS) indicate that, on average, young respondents underestimate their true survival probability whereas old respondents overestimate their survival probability. Such subjective beliefs violate the rational expectations paradigm and are also not in […]