An anticipated surprise-hazard framework for risky intertemporal choices

Ho Ka Chan and Taro Toyoizumi

Papers from arXiv.org

Abstract: People frequently deviate from classical utility theories when making risky and intertemporal decisions. While the effects of risk and temporal delay have been extensively studied in isolation, their interplay and underlying theoretical basis remain debated. In this work, we extend our previously proposed anticipated surprise framework to risky intertemporal choices by modeling delayed rewards as outcomes that fail to materialize at a constant hazard rate. This accounts for key empirical findings: diverse patterns of time inconsistency and aversion to timing risk stem from the avoidance of large negative surprises, while conflicting empirical findings on how risk affects temporal discounting emerge from differences in mental representations of outcome resolution. The extended framework offers a new perspective on how various types of risk may interact and provides a flexible foundation for analyzing complex real-life decision-making scenarios.

Date: 2025-03, Revised 2026-08
New Economics Papers: this item is included in nep-rmg and nep-upt
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