Does Time Inconsistency Differ between Gain and Loss? An Intra-Personal Comparison Using a Non-Parametric Designed Experimen
Shotaro Shiba and
Kazumi Shimizu
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Shotaro Shiba: Graduate School of Economics, Waseda University
No 1714, Working Papers from Waseda University, Faculty of Political Science and Economics
Abstract:
Several studies in the time preference literature have found time inconsistencies (TIs) in both the gain and loss domain. However, their relationship within the same person remains unclear: that is, does an individual who demonstrates TI for gain outcomes also do so for loss? To investigate this relationship, we conducted a nonparametric designed experiment that requires only standard axioms and no parametric specification for people's preferences. In the experiment, we allowed the measurement of TI to depend on character alternatives—such dependency has emerged as a crucial point in recent TI discussions. With these settings, we directly observed TI for gain and loss and found a so-called “future effect” for both outcomes. We also found a positive correlation between the degrees of TI for gain and loss within the same person, irrespective of character alternatives. In addition, in most cases, we found no significant differences between the degrees of TI for gain and loss. These results remained robust even when using another TI measurement. Our findings suggest that people's TI regarding gain and loss may not differ and the source of TI among individuals is common between their preference for gain and loss.Length: 28 pages
Date: 2017-09
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-upt
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