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A behavioral approach to inconsistencies in intertemporal choices with the Analytic Hierarchy Process methodology

Author

Listed:
  • Viviana Ventre

    (University of Campania Luigi Vanvitelli)

  • Cruz Rambaud Salvador

    (University of Almería, La Cañada de San Urbano)

  • Roberta Martino

    (University of Campania Luigi Vanvitelli)

  • Fabrizio Maturo

    (Universitas Mercatorum)

Abstract

The framework of this paper is behavioral finance and, more specifically, the analysis of the main anomalies (delay, magnitude and sign effects) present in the processes of intertemporal choice. To the extent of our knowledge, only the delay effect (also known as decreasing impatience) has been discriminated between moderately and strongly decreasing impatience. However, taking into account that anomalies must be explained from a psychological point of view, the main objective of this paper is to relate the aforementioned paradoxes with the four categories of temperaments (artisan, guardian, idealist and rational) by using the sixteen personality types derived from the Myers–Briggs Type Indicator and the Behavioral Investor Types. To do this, we will use the Analytic Hierarchy Process methodology in order to detect the different levels of impatience through the so-called hyperbolic factor. Indeed, the main contribution of this paper refers to an empirical application which complements the theoretical analysis.

Suggested Citation

  • Viviana Ventre & Cruz Rambaud Salvador & Roberta Martino & Fabrizio Maturo, 2023. "A behavioral approach to inconsistencies in intertemporal choices with the Analytic Hierarchy Process methodology," Annals of Finance, Springer, vol. 19(2), pages 233-264, June.
    • Handle: RePEc:kap:annfin:v:19:y:2023:i:2:d:10.1007_s10436-022-00419-6
    DOI: 10.1007/s10436-022-00419-6
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    References listed on IDEAS

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    1. Cruz Rambaud, Salvador & Parra Oller, Isabel María & Valls Martínez, María del Carmen, 2018. "The amount-based deformation of the q-exponential discount function: A joint analysis of delay and magnitude effects," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 508(C), pages 788-796.
    2. Kirsten Rohde, 2010. "The hyperbolic factor: A measure of time inconsistency," Journal of Risk and Uncertainty, Springer, vol. 41(2), pages 125-140, October.
    3. Yoram Wind & Thomas L. Saaty, 1980. "Marketing Applications of the Analytic Hierarchy Process," Management Science, INFORMS, vol. 26(7), pages 641-658, July.
    4. Salvador Cruz Rambaud & Isabel González Fernández & Viviana Ventre, 2018. "Modeling the inconsistency in intertemporal choice: the generalized Weibull discount function and its extension," Annals of Finance, Springer, vol. 14(3), pages 415-426, August.
    5. Salvador Cruz Rambaud & Isabel González Fernández & Viviana Ventre, 2018. "Correction to: Modeling the inconsistency in intertemporal choice: the generalized Weibull discount function and its extension," Annals of Finance, Springer, vol. 14(3), pages 427-427, August.
    6. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    7. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
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    More about this item

    Keywords

    AHP; Delay effect; Discount Function; Hyperbolic Factor; Impatience; Magnitude effect; Preference; Sign effect;
    All these keywords.

    JEL classification:

    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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