INDIVIDUAL LEARNING ABOUT CONSUMPTION

摘要: The standard approach to modeling consumption/saving problems is assume that the decisionmaker solving a dynamic stochastic optimization problem. However, under realistic descriptions of utility and uncertainty, optimal decision so difficult only recently have economists managed find solutions, using numerical methods require previously infeasible amounts computation. Yet, empirical evidence suggests household behavior conforms fairly well with prescriptions solution, raising question how average households can solve economists, until recently, could not. This paper examines whether consumers might be able reasonably good rule-of-thumb approximation by trial-and-error methods, as Milton Friedman proposed long ago. We such individual learning reliably identify rules thumb if consumer spend absurdly large time searching for rule.