Eliciting utility curvature and time preference

Stephen Cheung

No 2015-01, Working Papers from University of Sydney, School of Economics

Abstract: In both standard and behavioral theory, as well as experimental procedures to elicit time preference, it is commonly assumed that a single utility function is used to evaluate payoffs both under risk and over time. I introduce a novel experimental design to examine this assumption, by transposing the well-known Holt-Laury risk preference experiment from state-payoff space into time-dated payoff space. I find that the curvature of utility elicited directly from choices over time is significantly concave, but far closer to linear than utility elicited under risk. As a result, the effect of correcting discount rates for this curvature is modest.

Keywords: Risk preference; time preference; measurement of utility; discounted utility; choice list (search for similar items in EconPapers)
Date: 2015-01
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Eliciting utility curvature in time preference (2020)
Working Paper: Eliciting Utility Curvature in Time Preference (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:syd:wpaper:2015-01

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