Optimal Consumption under Uncertainty, Liquidity Constraints, and Bounded Rationality

2012 ◽  
Author(s):  
Ömer Özak
2018 ◽  
Vol 54 (4) ◽  
pp. 1643-1681 ◽  
Author(s):  
Seryoong Ahn ◽  
Kyoung Jin Choi ◽  
Byung Hwa Lim

We study consumption and investment decisions given realistic time-varying constraints on borrowing. We first consider the case where borrowing is constrained by a maximum debt-to-income ratio. We then consider collateral borrowing with a maximum loan-to-value ratio. The resulting implications for optimal policies differ considerably from those obtained in the existing literature based on fixed borrowing limits but are consistent with those documented in the empirical literature.


1985 ◽  
Vol 30 (4) ◽  
pp. 263-265
Author(s):  
Donald E. Broadbent
Keyword(s):  

Author(s):  
Joshua M. Epstein

This part describes the agent-based and computational model for Agent_Zero and demonstrates its capacity for generative minimalism. It first explains the replicability of the model before offering an interpretation of the model by imagining a guerilla war like Vietnam, Afghanistan, or Iraq, where events transpire on a 2-D population of contiguous yellow patches. Each patch is occupied by a single stationary indigenous agent, which has two possible states: inactive and active. The discussion then turns to Agent_Zero's affective component and an elementary type of bounded rationality, as well as its social component, with particular emphasis on disposition, action, and pseudocode. Computational parables are then presented, including a parable relating to the slaughter of innocents through dispositional contagion. This part also shows how the model can capture three spatially explicit examples in which affect and probability change on different time scales.


2020 ◽  
Author(s):  
Igor Grossmann ◽  
Richard Eibach

Previous theory and research on bounded rationality has emphasized how limited cognitive resources constrain people from making utility maximizing choices. This paper expands the concept of bounded rationality to consider how people’s rationality may be constrained by their internalization of a qualitatively distinct standard for sound judgment, which is commonly labeled reasonableness. In contrast to rationality, the standard of reasonableness provides guidance for making choices in situations that involve balancing incommensurable values and interests or reconciling conflicting points-of-view. We review recent evidence showing that laypeople readily recognize the distinctions between rationality and reasonableness and thus are able to utilize these as distinct standards to inform their everyday decision-making. The fact that people appear to have internalized rationality and reasonableness as distinct standards of sound judgment supports the notion that people’s pursuit of rationality may be bounded by their determination to also be reasonable.


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