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Visibility Bias in the Transmission of Consumption Beliefs and Undersaving / Bing Han, David Hirshleifer, Johan Walden.
- Format:
- Book
- Author/Creator:
- Han, Bing.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w25566.
- NBER working paper series no. w25566
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2019.
- Summary:
- We model visibility bias in the social transmission of consumption behavior. When consumption is more salient than non-consumption, people perceive that others are consuming heavily, and infer that future prospects are favorable. This increases aggregate consumption in a positive feedback loop. A distinctive implication is that disclosure policy interventions can ameliorate undersaving. In contrast with wealth-signaling models, information asymmetry about wealth reduces overconsumption. The model predicts that saving is influenced by social connectedness, observation biases, and demographic structure; and provides new insight into savings rates. These predictions are distinct from other common models of consumption distortions.
- Notes:
- Print version record
- February 2019.
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