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Reversal and magnitude effects in long-term time preferences: Results from a field experiment

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  • Bocquého, Géraldine
  • Jacquet, Florence
  • Reynaud, Arnaud

Abstract

We use a multiple price list approach with real payments to elicit long-term time preferences on a sample of French farmers. Elicited individual discount rates vary with the time delay, which supports the existence of a reversal effect in long-term time preferences, and increase with rewards, which contradicts the usual magnitude effect finding.

Suggested Citation

  • Bocquého, Géraldine & Jacquet, Florence & Reynaud, Arnaud, 2013. "Reversal and magnitude effects in long-term time preferences: Results from a field experiment," Economics Letters, Elsevier, vol. 120(1), pages 108-111.
  • Handle: RePEc:eee:ecolet:v:120:y:2013:i:1:p:108-111
    DOI: 10.1016/j.econlet.2013.04.006
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    References listed on IDEAS

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    1. James Andreoni & Charles Sprenger, 2012. "Estimating Time Preferences from Convex Budgets," American Economic Review, American Economic Association, vol. 102(7), pages 3333-3356, December.
    2. Glenn W. Harrison & Morten I. Lau & Melonie B. Williams, 2002. "Estimating Individual Discount Rates in Denmark: A Field Experiment," American Economic Review, American Economic Association, vol. 92(5), pages 1606-1617, December.
    3. Marc Scholten & Daniel Read, 2006. "Discounting by Intervals: A Generalized Model of Intertemporal Choice," Management Science, INFORMS, vol. 52(9), pages 1424-1436, September.
    4. Pender, John L., 1996. "Discount rates and credit markets: Theory and evidence from rural india," Journal of Development Economics, Elsevier, vol. 50(2), pages 257-296, August.
    5. Benhabib, Jess & Bisin, Alberto & Schotter, Andrew, 2010. "Present-bias, quasi-hyperbolic discounting, and fixed costs," Games and Economic Behavior, Elsevier, vol. 69(2), pages 205-223, July.
    6. Tomomi Tanaka & Colin F. Camerer & Quang Nguyen, 2010. "Risk and Time Preferences: Linking Experimental and Household Survey Data from Vietnam," American Economic Review, American Economic Association, vol. 100(1), pages 557-571, March.
    7. Mohammed Abdellaoui & Han Bleichrodt & Olivier L’Haridon, 2008. "A tractable method to measure utility and loss aversion under prospect theory," Journal of Risk and Uncertainty, Springer, vol. 36(3), pages 245-266, June.
    8. Read, Daniel, 2001. "Is Time-Discounting Hyperbolic or Subadditive?," Journal of Risk and Uncertainty, Springer, vol. 23(1), pages 5-32, July.
    9. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
    10. Saul Pleeter & John T. Warner, 2001. "The Personal Discount Rate: Evidence from Military Downsizing Programs," American Economic Review, American Economic Association, vol. 91(1), pages 33-53, March.
    11. Eric Duquette & Nathaniel Higgins & John Horowitz, 2012. "Farmer Discount Rates: Experimental Evidence," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(2), pages 451-456.
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    Cited by:

    1. Chen Wang & Ricardo Daziano, 2015. "On the problem of measuring discount rates in intertemporal transportation choices," Transportation, Springer, vol. 42(6), pages 1019-1038, November.
    2. Hermann, Daniel & Musshoff, Oliver, 2016. "Measuring time preferences: Comparing methods and evaluating the magnitude effect," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 65(C), pages 16-26.
    3. Hermann, Daniel & Mußhoff, Oliver & Rüther, Dörte, 2015. "Measuring farmers' time preference: A comparison of methods," DARE Discussion Papers 1506, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    4. repec:eee:ejores:v:265:y:2018:i:3:p:1033-1045 is not listed on IDEAS

    More about this item

    Keywords

    Time preferences; Experimental economics; Discounting; Farmers; France;

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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