CaltechAUTHORS
Published December 2012 | Version Published + Supplemental Material
Journal Article Open

Risk Preferences Are Not Time Preferences

Creators

  • 1. ROR icon University of California, San Diego
  • 2. ROR icon Stanford University

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.

Additional Information

© 2012 American Economic Association. We are grateful for the insightful comments of many colleagues, including Nageeb Ali, Michèlle Cohen, Soo Hong Chew, Vince Crawford, Tore Ellingsen, Guillaume Fréchette, Glenn Harrison, David Laibson, Mark Machina, William Neilson, Muriel Niederle, Matthew Rabin, Joel Sobel, Lise Vesterlund, participants at the Economics and Psychology lecture series at Paris 1, the Psychology and Economics segment at Stanford Institute of Theoretical Economics 2009, the Amsterdam Workshop on Behavioral and Experimental Economics 2009, the Harvard Experimental and Behavioral Economics Seminar, and members of the graduate experimental economics courses at Stanford University and the University of Pittsburgh. We also acknowledge the generous support of the National Science Foundation, grant SES-0962484 (Andreoni), and grant SES-1024683 (Andreoni and Sprenger).

Attached Files

Published - aer.102.7.3357.pdf

Supplemental Material - 20101223_app.pdf

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20101223_app.pdf

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Additional details

Identifiers

Eprint ID
104518
Resolver ID
CaltechAUTHORS:20200722-145634839

Related works

Describes
https://www.openicpsr.org/openicpsr/project/112570/version/V1/view (URL)

Funding

NSF
SES-0962484
NSF
SES-1024683

Dates

Created
2020-07-22
Created from EPrint's datestamp field
Updated
2021-11-16
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