Micro-Level Estimation of Optimal Consumption Choice With Intertemporal Nonseparability in Preferences and Measurement Errors

Gayle, Wayne-Roy; Khorunzhina, Natalia

doi:10.1080/07350015.2016.1149071

Cited by 15 publications

(3 citation statements)

References 54 publications

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“…With this proposal, it was feasible to estimate both the evolution of the group decision-making process and the final solution before carrying out the group discussion process and consequently foreseeing possible actions. In 2018, Gayle and Khorunzhina [30] put forward an extended model based on fuzzy consensus while evaluating resources. By this model, rational decisions could be made so as to reduce the impact of individual preference on evaluation accuracy.…”

Section: Literature Reviewmentioning

confidence: 99%

Public Opinion Polarization by Individual Revenue from the Social Preference Theory

Chen

et al. 2020

IJERPH

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Social conflicts occur frequently during the social transition period and the polarization of public opinion happens occasionally. By introducing the social preference theory, the target of this paper is to reveal the micro-interaction mechanism of public opinion polarization. Firstly, we divide the social preferences of Internet users (network nodes) into three categories: egoistic, altruistic, and fair preferences, and adopt the revenue function to define the benefits obtained by individuals with different preferences among their interaction process so as to analyze their decision-making behaviors driven by the revenue. Secondly, the revenue function is used to judge the exit rules of nodes in a network, and then a dynamic network of spreading public opinion with the node (individual) exit mechanism is built based on a BA scale-free network. Subsequently, the influences of different social preferences, as well as individual revenue on the effect of public opinion polarization, are analyzed through simulation experiments. The simulation results show that (1) Different social preferences demonstrate different influences on the evolution of public opinions, (2) Individuals tend to interact with ones with different preferences, (3) The network with a single preference or a high aggregation is more likely to form public opinion polarization. Finally, the practicability and effectiveness of the proposed model are verified by a real case.

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Section: Literature Reviewmentioning

confidence: 99%

Public Opinion Polarization by Individual Revenue from the Social Preference Theory

Chen

et al. 2020

IJERPH

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“…As for the alternative route towards a separation of relative risk aversion and the EIS, which retains expected utility while ruling out intertemporal separability of preferences, this has been undertaken through the introduction of habit formation in the utility function. Habit-forming preferences have been employed in works aiming at the estimation of structural parameters such as Khvostova, Larin, and Novak (2016) and Gayle and Khorunzhina (2017). However, most studies relying on Euler equation estimation have found little or no evidence of habits, such as Meghir and Weber (1996) and Dynan (2000).…”

Section: Pignalosamentioning

confidence: 99%

On the role of the utility function in the estimation of preference parameters

Pignalosa

2019

Metroeconomica

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Modern economic theory summarizes the main characteristics of individual preferences through a definite set of parameters: risk aversion, prudence, and the elasticity of intertemporal substitution. Despite their importance, the results of the literature devoted to the parameters’ estimation are controversial. This paper highlights the neglected role that may have been played by the constraints that the quantitative definition of the parameters and the utility functions employed impose on the estimation. A number of simulation exercises are presented, which show that the same saving behaviour can be associated with quite different values of the parameters depending on the utility function adopted.

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“…For example, recent papers that use log-linearized Euler equations include Dogra and Gorbachev (2016), Huang et al (2015), Mazzocco (2007), and Mudit and Ravi (2016). On the other hand, recent papers that cite Carroll (2001) against the use of linearized Euler equation include Gomes and Issler (2017), Gayle and Khorunzhina (2016), Adams et al (2016), and Benito and Mumtaz (2009).…”

Section: Supplementary Materialsmentioning

confidence: 99%

Euler Equation Estimation on Micro Data

2018

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Consumption Euler equations are important tools in empirical macroeconomics. When estimated on micro data, they are typically linearized, so standard IV or GMM methods can be employed to deal with the measurement error that is endemic to survey data. However, linearization, in turn, may induce serious approximation bias. We numerically solve and simulate six different life-cycle models, and then use the simulated data as the basis for a series of Monte Carlo experiments in which we evaluate the performance of linearized Euler equation estimation. We sample from the simulated data in ways that mimic realistic data structures. The linearized Euler equation leads to biased estimates of the EIS, but that bias is modest when there is a sufficient time dimension to the data, and sufficient variation in interest rates. However, a sufficient time dimension can only realistically be achieved with a synthetic cohort. Estimates from synthetic cohorts of sufficient length, while often exhibiting small mean bias, are quite imprecise. We also show that in all data structures, estimates are less precise in impatient models.

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Micro-Level Estimation of Optimal Consumption Choice With Intertemporal Nonseparability in Preferences and Measurement Errors

Cited by 15 publications

References 54 publications

Public Opinion Polarization by Individual Revenue from the Social Preference Theory

Public Opinion Polarization by Individual Revenue from the Social Preference Theory

On the role of the utility function in the estimation of preference parameters

Euler Equation Estimation on Micro Data

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