The Behavioral Life-Cycle Hypothesis

@article{Shefrin1988TheBL,
  title={The Behavioral Life-Cycle Hypothesis},
  author={H. Shefrin and R. Thaler},
  journal={Economic Inquiry},
  year={1988},
  volume={26},
  pages={609-643}
}
Self-control, mental accounting, and framing are incorporated in a behavioral enrichment of the life-cycle theory of saving called the behavioral life-cycle hypothesis. The key assumption of the behavioral life-cycle theory is that households treat components of their wealth as nonfungible, even in the absence of credit rationing. Specifically, wealth is assumed to be divided into three mental accounts: current income, current assets, and future income. The temptation to spend is assumed to be… Expand
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