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Do Couples Discount Future Consequences Less than Individuals?

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Author Info

  • Mohammed Abdellaoui

    (HEC-Paris & GREGHEC-CNRS, France)

  • Olivier l'Haridon

    (CREM CNRS UMR 6211, University of Rennes 1, France)

  • Corina Paraschiv

    (HEC-Paris & GREGHEC-CNRS, France)

Abstract

This paper examines couple time preferences by reporting the results of an ex- periment based on the elicitation of nearest equivalent values. Decisions involving delayed outcomes are studied for each of the two partners individually and for the couple. This allows for a direct comparison between couple behavior and individual partners’ behavior in choices over time. We use Fishburn and Rubinstein’s (1982) discounted utility model and infer measurements of utility and discounting at both the individual and the couple level. While utility is found to be similar for cou- ples and individuals, we observe that, in decision over time, couples discount future amounts of money less than individuals. This result suggests that making joint decisions significantly reduces revealed impatience. Moreover, we show that cou- ple time preferences cannot be considered as a mix of the individual preferences of each of the two partners. Taken together, these findings suggest that determinants of intertemporal decisions made by couples, such as financial decisions, should be considered as distinct from determinants of individual decisions.

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Bibliographic Info

Paper provided by Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS in its series Economics Working Paper Archive (University of Rennes 1 & University of Caen) with number 201320.

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Date of creation: Jun 2013
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Handle: RePEc:tut:cremwp:201320

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Postal: CREM (UMR CNRS 6211) – Faculty of Economics, 7 place Hoche, 35065 RENNES Cedex
Phone: 02 23 23 35 47
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Web page: http://crem.univ-rennes1.fr/
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Postal: CREM (UMR CNRS 6211) - Faculty of Economics, 7 place Hoche, 35065 Rennes Cedex - France
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Related research

Keywords: Household decision-making; time preferences; hyperbolic discounting;

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