Universität zu Köln

Ludwig, A. and Zimper, A. (2013). A parsimonious model of subjective life expectancy. Theory Decis., 75 (4). S. 519 - 542. DORDRECHT: SPRINGER. ISSN 0040-5833

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Abstract

On average, young people underestimate whereas old people overestimate their chances to survive into the future. Such subjective survival beliefs violate the rational expectations paradigm and are also not in line with models of rational Bayesian learning. In order to explain these empirical patterns in a parsimonious manner, we assume that self-reported beliefs express likelihood insensitivity and can, therefore, be modeled as non-additive beliefs. In a next step we introduce a closed form model of Bayesian learning for non-additive beliefs which combines rational learning with psychological attitudes in the interpretation of information. Our model gives a remarkable fit to average subjective survival beliefs reported in the Health and Retirement Study.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Ludwig, A. UNSPECIFIED UNSPECIFIED UNSPECIFIED Zimper, A. UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-475231
DOI:	10.1007/s11238-013-9355-6
Journal or Publication Title:	Theory Decis.
Volume:	75
Number:	4
Page Range:	S. 519 - 542
Date:	2013
Publisher:	SPRINGER
Place of Publication:	DORDRECHT
ISSN:	0040-5833
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language UPDATING AMBIGUOUS BELIEFS; SMOKING DECISIONS; PROBABILITIES; UNCERTAINTY; RISK; EXPECTATIONS; SURVIVAL; CHOICE; REPRESENTATION; CAPACITIES Multiple languages Economics; Social Sciences, Mathematical Methods Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/47523