Preference for increasing wages: How do people value various streams of income?

Sean Duffy and John Smith

MPRA Paper from University Library of Munich, Germany

Abstract: Prior studies have found that subjects prefer an improving sequence of income over a constant sequence, even if the constant sequence offers a larger present discounted value. However, little is known about how these preferences vary with the size of the wage payments. In each of our three studies, we find a relationship between the preference for increasing payments and the size of the payments. Further, our measure of the shape of the utility curve is not significantly related to this behavior. Our results roughly confirm an earlier theoretical prediction that the preference for increasing wage payments will be largest for payments which are neither very likely nor very unlikely to cover the cost of effort. Finally, consistent with the literature, we find mixed evidence regarding the applicability of these time preferences in domains other than money.

Keywords: time preference; experimental economics; intertemporal choice (search for similar items in EconPapers)
JEL-codes: C91 D90 (search for similar items in EconPapers)
Date: 2010-06-28
New Economics Papers: this item is included in nep-exp, nep-ltv and nep-upt
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https://mpra.ub.uni-muenchen.de/23559/1/MPRA_paper_23559.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/29961/1/MPRA_paper_29961.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/32636/3/MPRA_paper_32636.pdf revised version (application/pdf)

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Journal Article: Preference for increasing wages: How do people value various streams of income? (2013)
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