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Measuring time and risk preferences in an integrated framework

Mohammed Abdellaoui, Emmanuel Kemel, Amma Panin and Ferdinand Vieider ()

Games and Economic Behavior, 2019, vol. 115, issue C, 459-469

Abstract: We investigate time discounting under risk. To this end, we modify a popular multiple price list (MPL) design to elicit time discounting. Structural estimations of model parameters yield several new insights. For one, we find present bias to persist under risk, contrary to some previous evidence from the psychology literature. We further confirm the robustness of inverse-S shaped probability weighting. This is important inasmuch as random choice predicts the opposite shape in our setup. We also show that correcting for probability weighting under risk impacts the assessment of discount rates. Those are systematically underestimated under the commonly used, more restrictive, expected utility.

Keywords: Time preferences; Risk preferences; Rank-dependent utility; Present bias (search for similar items in EconPapers)
JEL-codes: D81 D90 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:115:y:2019:i:c:p:459-469

DOI: 10.1016/j.geb.2019.03.001

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