Estimating representations of time preferences and models of probabilistic intertemporal choice on experimental data
Pavlo R. Blavatskyy () and
Hela Maafi ()
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Pavlo R. Blavatskyy: Montpellier Business School, Montpellier Research in Management
Hela Maafi: Université Paris 8
Journal of Risk and Uncertainty, 2018, vol. 56, issue 3, 259-287
Abstract We here estimate a number of alternatives to discounted-utility theory, such as quasi-hyperbolic discounting, generalized hyperbolic discounting, and rank-dependent discounted utility with three different models of probabilistic choice. The data come from a controlled laboratory experiment designed to reveal individual time preferences in two rounds of 100 binary-choice problems. Rank-dependent discounted utility and its special case—the maximization of present discounted value—turn out to be the best-fitting theory (for about two-thirds of all subjects). For a great majority of subjects (72%), the representation of time preferences in Luce’s choice model provides the best fit.
Keywords: Intertemporal choice; Time preference; Discounted utility; Quasi-hyperbolic discounting; Rank-dependent discounted utility (search for similar items in EconPapers)
JEL-codes: D90 (search for similar items in EconPapers)
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