Published December 2012
| Published + Supplemental Material
Journal Article
Open
Risk Preferences Are Not Time Preferences
- Creators
- Andreoni, James
- Sprenger, Charles
Abstract
Risk and time are intertwined. The present is known while the future is inherently risky. This is problematic when studying time preferences since uncontrolled risk can generate apparently present-biased behavior. We systematically manipulate risk in an intertemporal choice experiment. Discounted expected utility performs well with risk, but when certainty is added common ratio predictions fail sharply. The data cannot be explained by prospect theory, hyperbolic discounting, or preferences for resolution of uncertainty, but seem consistent with a direct preference for certainty. The data suggest strongly a difference between risk and time preferences.
Additional Information
© 2012 American Economic Association. We are grateful for the insightful comments of many colleagues, including Nageeb Ali, Michèlle Cohen, Soo Hong Chew, Vince Crawford, Tore Ellingsen, Guillaume Fréchette, Glenn Harrison, David Laibson, Mark Machina, William Neilson, Muriel Niederle, Matthew Rabin, Joel Sobel, Lise Vesterlund, participants at the Economics and Psychology lecture series at Paris 1, the Psychology and Economics segment at Stanford Institute of Theoretical Economics 2009, the Amsterdam Workshop on Behavioral and Experimental Economics 2009, the Harvard Experimental and Behavioral Economics Seminar, and members of the graduate experimental economics courses at Stanford University and the University of Pittsburgh. We also acknowledge the generous support of the National Science Foundation, grant SES-0962484 (Andreoni), and grant SES-1024683 (Andreoni and Sprenger).Attached Files
Published - aer.102.7.3357.pdf
Supplemental Material - 20101223_app.pdf
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20101223_app.pdf
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Additional details
- Eprint ID
- 104518
- Resolver ID
- CaltechAUTHORS:20200722-145634839
- SES-0962484
- NSF
- SES-1024683
- NSF
- Created
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2020-07-22Created from EPrint's datestamp field
- Updated
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2021-11-16Created from EPrint's last_modified field