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Time Preferences in the Gain and Loss Domains: An Incentivized Experiment

Author

Listed:
  • Shohei Yamamoto

    (Hitotsubashi University Business School)

  • Shotaro Shiba

    (Waseda University)

  • Nobuyuki Hanaki

    (Osaka University)

Abstract

Present-biased preferences in intertemporal decisions have been actively investigated. While these preferences have been elicited through incentivized experiments in the gain domain to avoid potential hypothetical bias, they have been elicited only through hypothetical experiments in the loss domain. We conducted a two-stage experiment that enabled us to elicit these preferences in the gain and loss domains in an incentive-compatible way. We found that present bias, which is exhibited in both domains, is more severe in the loss domain.

Suggested Citation

  • Shohei Yamamoto & Shotaro Shiba & Nobuyuki Hanaki, 2020. "Time Preferences in the Gain and Loss Domains: An Incentivized Experiment," Working Papers 2012, Waseda University, Faculty of Political Science and Economics.
    • Handle: RePEc:wap:wpaper:2012
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    References listed on IDEAS

    as
    1. Stephan Meier & Charles Sprenger, 2010. "Present-Biased Preferences and Credit Card Borrowing," American Economic Journal: Applied Economics, American Economic Association, vol. 2(1), pages 193-210, January.
    2. Oechssler, Jörg & Roider, Andreas & Schmitz, Patrick W., 2009. "Cognitive abilities and behavioral biases," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 147-152, October.
    3. Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
    4. Mohammed Abdellaoui & Han Bleichrodt & Corina Paraschiv, 2007. "Loss Aversion Under Prospect Theory: A Parameter-Free Measurement," Management Science, INFORMS, vol. 53(10), pages 1659-1674, October.
    5. Mohammed Abdellaoui & Han Bleichrodt & Olivier l’Haridon, 2013. "Sign-dependence in intertemporal choice," Journal of Risk and Uncertainty, Springer, vol. 47(3), pages 225-253, December.
    6. Paul A. Samuelson, 1937. "A Note on Measurement of Utility," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 4(2), pages 155-161.
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    Cited by:

    1. Shohei Yamamoto & Shotaro Shiba & Nobuyuki Hanaki, 2024. "Outcome- And Sign-Dependent Time Preferences: An Incentivized Intertemporal Choice Experiment Involving Effort And Money," ISER Discussion Paper 1230, Institute of Social and Economic Research, Osaka University.

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    More about this item

    Keywords

    Intertemporal choice; Present bias; Gains and losses;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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