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Do risk and time preferences have biological roots?

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  • Drichoutis, Andreas
  • Nayga, Rodolfo

Abstract

We revisit the claims about the biological underpinnings of economic behavior by specifically exploring if observed gender differences in risk/time preferences can be explained by natural fluctuations in progesterone/estradiol levels during the menstrual cycle and by prenatal exposure to testosterone levels. Results suggest that natural fluctuations in progesterone levels have a direct effect on discount rates and that estradiol/progesterone levels can indirectly affect time preferences by changing the curvature of the utility function. Using measured D2:D4 digit ratio, results imply that subjects with low digit ratio exhibit higher discount rates and risk loving preferences.

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File URL: http://mpra.ub.uni-muenchen.de/43754/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 37320.

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Date of creation: 12 Mar 2012
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Handle: RePEc:pra:mprapa:37320

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Keywords: discount rates; risk aversion; lab experiment; menstrual cycle; D2:D4 ratio; hormones; estradiol; progesterone; testosterone;

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Cited by:
  1. Pablo Brañas-Garza & Jaromír Kovárík, 2013. "Digit Ratios and Social Preferences: A Comment on Buser (2012)," Working Papers 13-31, Chapman University, Economic Science Institute.

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