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Eliciting Utility Curvature in Time Preference

Stephen Cheung

No 12535, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper examines the effects of alternative assumptions regarding the curvature of utility upon estimated discount rates in experimental data. To do so, it introduces a novel design to elicit time preference building upon a translation of the Holt and Laury method for risk. The results demonstrate that utility elicited directly from choice over time is significantly concave, but far closer to linear than utility elicited under risk. As a result, the effect of adjusting discount rates for this curvature is modest compared to assuming linear utility, and considerably less than when utility from a risk preference task is imposed.

Keywords: time preference; measurement of utility; discounted utility; choice list (search for similar items in EconPapers)
JEL-codes: C91 D01 D90 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2019-08
New Economics Papers: this item is included in nep-exp and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Published in: Experimental Economics, 2020, 23 (2), 493-525

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http://ftp.iza.org/dp12535.pdf (application/pdf)

Related works:
Journal Article: Eliciting utility curvature in time preference (2020) Downloads
Working Paper: Eliciting utility curvature and time preference (2015) Downloads
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