Evolution of Time Preferences and Attitudes toward Risk
AbstractThis paper explores a general model of the evolution and adaption of hedonic utility. It is shown that optimal utility will be increasing strongly in regions where choices have to be made often and decision mistakes have a severe impact on fitness. Several applications are suggested. In the context of intertemporal preferences, the model offers an evolutionary explanation for the existence of conflicting short- and long-run interests that lead to dynamic inconsistency. Concerning attitudes toward risk, an evolutionary explanation is given for S-shaped value functions that adjust to the decision maker's environment. (JEL D81, D83)
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Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Review.
Volume (Year): 99 (2009)
Issue (Month): 3 (June)
Other versions of this item:
- Nick Netzer, 2008. "Evolution of Time Preferences and Attitudes Towards Risk," TWI Research Paper Series 29, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Netzer AER - Evolution of Time Preferences and Attitude Toward Risk
by Liam Delaney in Geary Behaviour Centre on 2010-08-08 10:42:00
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