Risk and time preferences interaction: An experimental measurement

Jeeva Somasundaram () and Vincent Eli
Additional contact information
Jeeva Somasundaram: IE Business School
Vincent Eli: S3 Labs, HEC Paris

Journal of Risk and Uncertainty, 2022, vol. 65, issue 2, No 4, 215-238

Abstract: Abstract We experimentally characterize and measure the interaction between risk and time preferences. Our results indicate that risk and time preferences are intertwined. We find that decision makers are insensitive to time delay for small probabilities of gains, but become progressively more sensitive to time delay as the probability of gain increases. We compare the fit of existing decision models that capture risk and time preferences. Our results indicate that the models which allow for probability-time interaction and capture magnitude effect fit the data better. We also show that accounting for risk-time preferences interaction leads to lower estimated discount rates.

Keywords: Risk attitudes; Time preferences; Risk-time preferences interaction (search for similar items in EconPapers)
JEL-codes: D81 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s11166-022-09394-9 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jrisku:v:65:y:2022:i:2:d:10.1007_s11166-022-09394-9

Ordering information: This journal article can be ordered from
http://www.springer. ... ry/journal/11166/PS2

DOI: 10.1007/s11166-022-09394-9

Access Statistics for this article

Journal of Risk and Uncertainty is currently edited by W. Kip Viscusi

More articles in Journal of Risk and Uncertainty from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().