Revisiting the diagnosis of intertemporal preference reversals

Zhihua Li () and Graham Loomes ()
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Zhihua Li: University of Birmingham
Graham Loomes: University of Warwick

Journal of Risk and Uncertainty, 2022, vol. 64, issue 1, No 2, 19-41

Abstract: Abstract Intertemporal preference reversals occur when individuals choose future option A over future option B in a direct choice between the two but place a higher ‘immediate cash’ value on B than on A. Tversky et al. (1990) reported strong evidence of such reversals, which they attributed mainly to valuation biases rather than intransitivity. We find similar levels of reversals, even after adjusting for considerable degrees of variability and imprecision in people’s responses. However, we disagree with Tversky et al.’s conclusions about the causes of the majority of these reversals. We find substantial levels of intransitivity in respondents’ binary choices as well as differential overvaluation of both options relative to the values inferred from their choices.

Keywords: Intertemporal choice; Preference reversals; Decision experiment (search for similar items in EconPapers)
JEL-codes: C91 D15 D91 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11166-022-09369-w

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