Anomalies In Intertemporal Choice?
AbstractThis paper argues that observations of non-stationary choice behavior need not necessarily imply specific properties of the individual’s discount function. As we show, the observed “anomalies” in intertemporal choice can alternatively be explained by an individual’s perception of the risk that is involved whenever an outcome is to be received in the future. This risk may concern the size of the actual outcome or the endowment consumption stream to which the outcome is added. Both types of uncertainty naturally appear in the context of intertemporal choice and both are difficult to control in experiments. We show how relative degrees of changes in risk over time can predict choices.
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Bibliographic InfoPaper provided by Swiss Finance Institute in its series Swiss Finance Institute Research Paper Series with number 07-12.
Length: 34 pages
Date of creation: Apr 2007
Date of revision:
Hyperbolic Discounting; Decreasing Impatience; Increasing impatience; Risk; Magnitude Effect; Gain-Loss Asymmetry;
Find related papers by JEL classification:
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-10-20 (All new papers)
- NEP-EVO-2007-10-20 (Evolutionary Economics)
- NEP-EXP-2007-10-20 (Experimental Economics)
- NEP-UPT-2007-10-20 (Utility Models & Prospect Theory)
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- Stefania Albanesi & Claudia Olivetti, 2007.
"Gender Roles and Technological Progress,"
0607-12, Columbia University, Department of Economics.
- Stefania Albanesi & Claudia Olivetti, 2007. "Gender Roles and Technological Progress," NBER Working Papers 13179, National Bureau of Economic Research, Inc.
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- Stefania Albanesi & Claudia Olivetti, 2007. "Gender Roles and Technological Progress," Boston University - Department of Economics - Working Papers Series WP2007-029, Boston University - Department of Economics.
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