This paper proposes a new framework of intertemporal choice: decision making by means of so-called feasibility goals. These refer to the feasibility of certain target levels of consumption associated with specific future benchmark scenarios. The feasibility goals framework takes into account bounded/procedural rationality without stepping outside the realm of an optimization framework. The paper has two aims. First, it provides a general characterization of the feasibility goals framework. Second, it provides a simple life cycle model with feasibility goals to illustrate the applicability of the concept. The life cycle model is promising for better understanding individual portfolio choice.
- feasibility goals
- bounded/procedural rationality
- life cycle saving
- portfolio choice
Binswanger, J. (2011). Dynamic decision making with feasibility goals: A procedural-rationality approach. Journal of Economic Behavior and Organization, 78(3), 219-228. https://doi.org/10.1016/j.jebo.2011.01.006