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Temptation-biased preferences for risk and time

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  • Schneider, Mark

Abstract

We introduce a model of temptation-biased preferences that generalizes quasi-hyperbolic discounting and quasi-rank-dependent probability weighting. The model explains empirically observed interactions between risk and time preferences and empirically observed correlations between expected utility violations and discounted utility violations.

Suggested Citation

  • Schneider, Mark, 2020. "Temptation-biased preferences for risk and time," Economics Letters, Elsevier, vol. 193(C).
    • Handle: RePEc:eee:ecolet:v:193:y:2020:i:c:s0165176520301944
    DOI: 10.1016/j.econlet.2020.109293
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    References listed on IDEAS

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    1. Keren, Gideon & Roelofsma, Peter, 1995. "Immediacy and Certainty in Intertemporal Choice," Organizational Behavior and Human Decision Processes, Elsevier, vol. 63(3), pages 287-297, September.
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    6. Quiggin, John, 1982. "A theory of anticipated utility," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 323-343, December.
    7. Thomas Epper & Helga Fehr-Duda & Adrian Bruhin, 2011. "Viewing the future through a warped lens: Why uncertainty generates hyperbolic discounting," Journal of Risk and Uncertainty, Springer, vol. 43(3), pages 169-203, December.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Risk preference; Time preference; Discounted expected utility; Present bias; Temptation;
    All these keywords.

    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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