The new classical school's dominance of mainstream economic thought in recent years has brought with it the associated adoption of rational economic agents ( in the Muthian sense) by mainstream economists. This thesis challenges this underlying assumption of human behaviour in the context of the non-durable consumption expenditure decision making process. In doing so, our attention will be placed upon the weak or more general form of the hypothesis, which has come to be known as optimisation. We employ a behavioural methodology in an attempt to ascertain if individuals adhere to the optimising or satisficing model of human behaviour. In doing so time will be spent examining the bounded rationality hypothesis. We also employ a behavioural methodology in producing a non-durable consumption function that is econometrically comparable with an optimising model of non-durable consumption expenditure (namely the permanent income rational expectations hypothesis). The micro results produced in this thesis suggest that the respondents surveyed from non-durable consumption expenditure decisions that are sub-optimal in nature. The formation of these sub-tropical expenditure decisions appear to be a consequence of the cognitive constraints faced by our respondents, which in turn provides empirical support for the bounded rationality hypothesis. On a macro level, our behavioural consumption function generates results that are comparable with those produced by the optimising model employed in this thesis. Our results also question the rational expectations permanent income hypothesis (as it is usually applied), despite making adjustments to the model which remove the underlying assumption of known, constant real interest use / Master of Commerce (Hons)
| Identifer | oai:union.ndltd.org:ADTP/181645 |
| Date | January 1995 |
| Creators | Tolar, Martin, University of Western Sydney, Macarthur, Faculty of Business and Technology |
| Source Sets | Australiasian Digital Theses Program |
| Language | English |
| Detected Language | English |
| Source | THESIS_FBT_XXX_Tolar_M.xml |
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