Hentall MacCuish, Jamie; (2023) Economic Implications of Inattention and Altruism. Doctoral thesis (Ph.D), UCL (University College London).

Preview

Text Hentall Maccuish_10179199_Thesis_sigs_removed.pdf Download (4MB) | Preview

Abstract

This thesis explores the economic implications of increasing the psychological realism used in economic models. It does this along two dimensions. The first two chapters investigate the economic implications of limited attention, and the third those of altruism between parent and child. The first chapter shows that incorporating limited attention into a model of retirement explains both observed mistaken pension beliefs and the large drop in employment at pension eligibility age in spite of weak economic incentives to stop working precisely at that age. The second chapter documents a previously undocumented attribute of inattention: it can separate risk and time preferences. Standard time-additive expected-utility theory famously implies that the coefficient of relative risk aversion and the elasticity of intertemporal substitution are inverse reciprocals. This complete lack of independence between two key risk and time parameters is at the heart of some of the most famous puzzles in finance. This chapter shows costly attention can separate them because it introduces a new reason for agents to dislike risk unrelated to the curvature of utility that determines the intertemporal elasticity of substitution: the utility cost of reducing uncertainty. The third chapter jointly studies different channels through which altruistic parents invest in their children - by spending time with them to foster cognitive skills, by paying for their education, and by making monetary transfers.

Download activity - last month

Export as XMLCSVJSON

Download activity - last 12 months

Export as CSVJSONXML

Downloads by country - last 12 months

Export as XMLJSONCSV

Archive Staff Only

View Item