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Measuring time and risk preferences in an integrated framework

Author

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  • Mohammed Abdellaoui

    (GREGHEC - Groupement de Recherche et d'Etudes en Gestion - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

  • Emmanuel Kemel

    (GREGHEC - Groupement de Recherche et d'Etudes en Gestion - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

  • Amma Panin
  • Ferdinand Vieider

Abstract

We investigate time discounting under risk. To this end, we modify a popular multiple price list (MPL) design to elicit time discounting. Structural estimations of model parameters yield several new insights. For one, we find present bias to persist under risk, contrary to some previous evidence from the psychology literature. We further confirm the robustness of inverse-S shaped probability weighting. This is important inasmuch as random choice predicts the opposite shape in our setup. We also show that correcting for probability weighting under risk impacts the assessment of discount rates. Those are systematically underestimated under the commonly used, more restrictive, expected utility.
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  • Mohammed Abdellaoui & Emmanuel Kemel & Amma Panin & Ferdinand Vieider, 2019. "Measuring time and risk preferences in an integrated framework," Post-Print hal-03329772, HAL.
    • Handle: RePEc:hal:journl:hal-03329772
    DOI: 10.1016/j.geb.2019.03.001
    Note: View the original document on HAL open archive server: https://hal.science/hal-03329772
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    Cited by:

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    2. Thomas, Ranjeeta & Galizzi, Matteo M. & Moorhouse, Louisa & Nyamukapa, Constance & Hallett, Timothy B., 2024. "Do risk, time and prosocial preferences predict risky sexual behaviour of youths in a low-income, high-risk setting?," Journal of Health Economics, Elsevier, vol. 93(C).
    3. Insaf Bekir & Faten Doss, 2020. "Status quo bias and attitude towards risk: An experimental investigation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(5), pages 827-838, July.
    4. Kemel, Emmanuel & Paraschiv, Corina, 2023. "Risking the future? Measuring risk attitudes towards delayed consequences," Journal of Economic Behavior & Organization, Elsevier, vol. 208(C), pages 325-344.
    5. Abdellaoui, Mohammed & Kemel, Emmanuel & Panin, Amma & Vieider, Ferdinand M., 2024. "Time for tea: Measuring discounting for money and consumption without the utility confound," Journal of Development Economics, Elsevier, vol. 168(C).
    6. Abdellaoui, Mohammed & Kemel, Emmanuel & Panin, Amma & Vieider, Ferdinand M., 2023. "Time for Tea: Measuring Discounting for Money and Consumption without the Utility Confound," LIDAM Discussion Papers CORE 2023007, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    7. Thomas Meissner & David Albrecht, 2022. "Debt Aversion: Theory and Measurement," Papers 2207.07538, arXiv.org, revised Jul 2022.
    8. Emmanuel Kemel & Corina Paraschiv, 2023. "Risking the future? Measuring risk attitudes towards delayed consequences," Post-Print hal-04385738, HAL.
    9. Johan Burgaard & Mogens Steffensen, 2020. "Eliciting Risk Preferences and Elasticity of Substitution," Decision Analysis, INFORMS, vol. 17(4), pages 314-329, December.
    10. Cédric Gutierrez & Emmanuel Kemel, 2024. "Measuring natural source dependence," Experimental Economics, Springer;Economic Science Association, vol. 27(2), pages 379-416, April.
    11. Cédric Gutierrez & Emmanuel Kemel, 2021. "Measuring natural source dependence," Working Papers hal-03330409, HAL.
    12. Thomas Meissner & Xavier Gassmann & Corinne Faure & Joachim Schleich, 2023. "Individual characteristics associated with risk and time preferences: A multi country representative survey," Journal of Risk and Uncertainty, Springer, vol. 66(1), pages 77-107, February.
    13. Jeeva Somasundaram & Vincent Eli, 2022. "Risk and time preferences interaction: An experimental measurement," Journal of Risk and Uncertainty, Springer, vol. 65(2), pages 215-238, October.
    14. Emmanuel Kemel & Corina Paraschiv, 2021. "Risking the Future? Measuring Risk Attitudes towards Delayed Consequences," Working Papers hal-03330096, HAL.
    15. Guoren Long & Xiaoyan Zhou & Jun Li, 2024. "Land Tenure, Loans, and Farmers’ Cropland Conservation Behavior: Evidence from Rural Northwest China," Land, MDPI, vol. 13(4), pages 1-20, March.
    16. Mao, Hui & Zhou, Li & Ying, RuiYao & Pan, Dan, 2021. "Time Preferences and green agricultural technology adoption: Field evidence from rice farmers in China," Land Use Policy, Elsevier, vol. 109(C).
    17. David Scrogin, 2023. "Estimating risk and time preferences over public lotteries: Findings from the field and stream," Journal of Risk and Uncertainty, Springer, vol. 67(1), pages 73-106, August.
    18. Holden, Stein T. & Tilahun, Mesfin, 2019. "How related are risk preferences and time preferences?," CLTS Working Papers 4/19, Norwegian University of Life Sciences, Centre for Land Tenure Studies, revised 16 Oct 2019.
    19. Zachary Breig, 2020. "Prediction and Model Selection in Experiments," The Economic Record, The Economic Society of Australia, vol. 96(313), pages 153-176, June.
    20. Sommervoll, Dag Einar & Holden, Stein T., 2024. "Dominated choices in Risk and Time Elicitation," CLTS Working Papers 1/24, Norwegian University of Life Sciences, Centre for Land Tenure Studies.

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    More about this item

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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