Risk Preferences Are Not Time Preferences: Separating Risk and Time Preference: Comment
American Economic Review
vol. 105,
no. 7, July 2015
(pp. 2272-86)
Abstract
Andreoni and Sprenger (2012a,b) observe that utility functions are distinct for risk and time preferences, and show that their findings are consistent with a preference for certainty. We revisit this question in an enriched experimental setting in which subjects make intertemporal decisions under different risk conditions. The observed choice behavior supports a separation between risk attitude and intertemporal substitution rather than a preference for certainty. We further show that several models, including Epstein and Zin (1989); Chew and Epstein (1990); and Halevy (2008) exhibit such a separation and can account for the overall experimental findings. (JEL C91, D81, D91)Citation
Miao, Bin, and Songfa Zhong. 2015. "Risk Preferences Are Not Time Preferences: Separating Risk and Time Preference: Comment." American Economic Review, 105 (7): 2272-86. DOI: 10.1257/aer.20131183Additional Materials
JEL Classification
- C91 Design of Experiments: Laboratory, Individual
- D81 Criteria for Decision-Making under Risk and Uncertainty
- D15 Intertemporal Household Choice; Life Cycle Models and Saving