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Andreoni, James, and
Charles Sprenger. 2012. "Risk Preferences Are Not Time Preferences."
,
102(7): 3357-76.
Show Article Details
DOI: 10.1257/aer.102.7.3357
Abstract:Risk and time are intertwined. The present is known while the future
is inherently risky. This is problematic when studying time preferences
since uncontrolled risk can generate apparently present-biased
behavior. We systematically manipulate risk in an intertemporal
choice experiment. Discounted expected utility performs well with
risk, but when certainty is added common ratio predictions fail
sharply. The data cannot be explained by prospect theory, hyperbolic
discounting, or preferences for resolution of uncertainty, but seem
consistent with a direct preference for certainty. The data suggest
strongly a difference between risk and time preferences. (JEL C91
D81 D91)
Additional links:
Download Data Set |
Online Appendix
Authors:
Andreoni, James (U CA, San Diego)
Sprenger, Charles (Stanford U)
JEL Classifications:
C91: Design of Experiments: Laboratory, Individual
D81: Criteria for Decision-Making under Risk and Uncertainty
D91: Intertemporal Consumer Choice; Life Cycle Models and Saving
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