Risk Preferences Are Not Time Preferences: Comment

Stephen Cheung

No 6762, IZA Discussion Papers from IZA Network @ LISER

Abstract: Andreoni and Sprenger (in press) report evidence that distinct utility functions govern choices under certainty and risk. I investigate the robustness of their result to the experimental design. I find that the effect disappears completely when a multiple price list is used instead of a convex time budget design. Also, the effect is reduced by half when sooner and later payment risks are realized using a single lottery instead of two independent lotteries. The result is thus partially driven by intertemporal diversification, suggesting an explanation in terms of concavity of the intertemporal, and not only the atemporal, utility function.

Keywords: intertemporal choice; risk and certainty; convex time budget; multiple price list (search for similar items in EconPapers)
JEL-codes: C91 D03 D81 D90 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2012-07
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 (6)

Published - revised version published as 'Comment on "Risk Preferences Are Not Time Preferences": On the Elicitation of Time Preference under Conditions of Risk' in: American Economic Review, 2015, 105 (7), 2242-2260

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