Originally published at: Behavioural Life-Cycle Models – VFI Toolkit
Impatience, Temptation and Self-Control, Loss Aversion and Ambiguity Aversion can now all be handled in life-cycle models. The Intro to Life-Cycle Models includes examples of each of these.Impatience, modeled as Quasi-Hyperbolic Discounting, is demonstrated in Life-Cycle Model 36. Temptation and Self-Control, modeled as Gul-Pesendorfer preferences, is demonstrated in Life-Cycle Model 37. Loss Aversion, modeled as…