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Measuring Time and Risk Preferences: Realiability, Stability, Domain Specificity

Eva Wölbert and Arno Riedl

No 4339, CESifo Working Paper Series from CESifo Group Munich

Abstract: To accurately predict behavior economists need reliable measures of individual time preferences and attitudes toward risk and typically need to assume stability of these characteristics over time and across decision domains. We test the reliability of two choice tasks for eliciting discount rates, risk aversion, and probability weighting and assess the stability of these characteristics over time and across situations. We find high reliability and that individual characteristics are remarkably stable over time. The estimated parameters correlate well with self-reported decisions in financial domains, but are largely uncorrelated with decisions in other important life domains involving intertemporal trade-offs and risk.

Keywords: time discounting; risk aversion; probability weighting; reliability; stability; domain specificity; experiment (search for similar items in EconPapers)
JEL-codes: C18 C91 D03 D80 D90 (search for similar items in EconPapers)
Date: 2013
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Working Paper: Measuring time and risk preferences: Reliability, stability, domain specificity (2013) Downloads
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