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Modeling Interactions between Risk, Time, and Social Preferences

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  • Mark Schneider

    (University of Alabama)

Abstract

Recent studies have observed systematic interactions between risk, time, and social preferences that constitute violations of `dimensional independence' and are not explained by the leading models of decision making. This note provides a simple approach to modeling such interaction eects while predicting new ones. In particular, we present a model of rational-behavioral preferences that takes the convex combination of `behavioral' System 1 preferences and `rational' System 2 preferences. The model provides a unifying approach to analyzing risk, time, and social preferences, and predicts how these preferences are correlated with reliance on System 1 or System 2 thinking.

Suggested Citation

  • Mark Schneider, 2018. "Modeling Interactions between Risk, Time, and Social Preferences," Working Papers 18-19, Chapman University, Economic Science Institute.
    • Handle: RePEc:chu:wpaper:18-19
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    File URL: https://digitalcommons.chapman.edu/esi_working_papers/258/
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    More about this item

    Keywords

    Risk; Time; Social preference; System 1; System 2;
    All these keywords.

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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