When She Lives Longer: An Experimental Study of Saving Decisions by Couples
Humboldt University of Berlin - Faculty of Economics
Dennis Alexis Valin Dittrich
Jacobs University Bremen; Bremen International Graduate School of Social Sciences (BIGSSS)
Max Planck Institute of Economics; CESifo (Center for Economic Studies and Ifo Institute)
Groupe d' Analyse et de Theorie Economique (GATE)
Max Planck Institute for Research into Economic Systems, Papers on Strategic Interaction Working Paper No. 02-2002
We investigate the intertemporal allocation behavior of spouses with different deterministic life expectations in an experiment. In each period of their life both partners propose a consumption level of which one is then randomly implemented. Thus both partners must anticipate their partner's and their own future choices when deciding how much to consume today. To allow for learning one experiences many "lives". In spite of the complex dynamics optimal behavior is rather simple and straightforward in the sense of conditional consumption smoothing. Participants achieve a rather high degree of efficiency that does not change over time. A substantial number of participants does not care whether their partner receives any payoff. This extremely selfish behavior is punished by their respective partners.
Number of Pages in PDF File: 19
Keywords: intra-household behavior, experimental economics, other regarding attitudes, reputation formation
JEL Classification: C73, C91, D91working papers series
Date posted: September 13, 2002
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