Abstract for: Simulating Lifetime Saving Decisions: The Behavioral Economics of Countervailing Cognitive Biases

Behavioral Economics has a rich tradition of empirical studies involving the effects of personal decision biases involving trade-offs between future and present utility values. Although research in the area has identified several psychological biases in the decision making process, most research explores one bias at a time, given the computational complexity of considering more than one, among other reasons. This program of research proposes to create a numerical platform for exploring the implications of how countervailing biases may interact to create unexpected outcomes when two or more biases are present at the same time. It will use life-time savings decisions as a theoretical domain since both theory and empirical studies are well-developed. Our program of research involves four main stages: 1) analyzing the “Individual Utility Function” model in behavioral economics, 2) developing a simulation platform to explore strategies to maximize lifetime utility incorporating four biases widely-explored in the behavioral economics literature, 3) using the platform to explore main interactions among the four biases, and 4) reflect on the process and results to contribute to the field of behavioral economics. In this paper, we introduce these four steps, and also discuss initial progress in stages 1 and 2.