Impatience, Temptation and Self-Control, Loss Aversion and Ambiguity Aversion can now all be handled in life-cycle models. The Intro to Life-Cycle Models includes examples of each of these.

Impatience, modeled as Quasi-Hyperbolic Discounting, is demonstrated in Life-Cycle Model 36. Temptation and Self-Control, modeled as Gul-Pesendorfer preferences, is demonstrated in Life-Cycle Model 37. Loss Aversion, modeled as Prospect Theory, is demonstrated in Life-Cycle Model 38. Ambiguity Aversion, modeled as maximin over multiple priors, is demonstrated in Life-Cycle Model 39.

Behavioural economics became part of mainstream economics a decade or two ago, but remains only occasionally seen in structural models and Macroeconomics. Assuming this is largely because it requires relearning how to solve models for each different setting , hopefully their implementation in VFI Toolkit will help see them become more widely used.

All of these behavioural aspects can also be used in OLG models. When using behavioural in an OLG model the only part of the model that changes is the life-cycle model. The behavioural aspects determine the optimal policy functions, but once we have the policy nothing else about solving an OLG model changes.

The Appendix to the Intro to Life-Cycle Models contains explanations of how these preferences work, and how they are implemented in codes. These behavioural life-cycle models tend to run marginally slower that a standard life-cycle model, but almost always just one to two times slower so they are easily usable.

If you are unfamiliar with these behavioural life-cycle models, you might find these related lecture slides useful.

VFI Toolkit also handles Epstein-Zin preferences.