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Time preferences and risk aversion: Tests on domain differences

Author

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  • Christos A. Ioannou

    () (University of Southampton)

  • Jana Sadeh

    () (University of Southampton)

Abstract

Abstract Understanding how individuals discount and evaluate the risks of environmental outcomes is a prime component in designing effective environmental policy. We use an incentivized experimental design to investigate whether subjects’ time preferences and risk aversion across the monetary and environmental domains differ. We find that subjects’ time preferences are not significantly different across the two domains. In contrast, subjects exhibit a higher degree of risk aversion in the environmental domain. Furthermore, we corroborate earlier results, documenting that women are more risk averse than men in the monetary domain, and show this finding to also hold in the environmental domain.

Suggested Citation

  • Christos A. Ioannou & Jana Sadeh, 2016. "Time preferences and risk aversion: Tests on domain differences," Journal of Risk and Uncertainty, Springer, vol. 53(1), pages 29-54, August.
  • Handle: RePEc:kap:jrisku:v:53:y:2016:i:1:d:10.1007_s11166-016-9245-8
    DOI: 10.1007/s11166-016-9245-8
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    References listed on IDEAS

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    Cited by:

    1. Alina Ferecatu & Ayse Önçüler, 2016. "Heterogeneous risk and time preferences," Journal of Risk and Uncertainty, Springer, vol. 53(1), pages 1-28, August.
    2. repec:kap:jrisku:v:55:y:2017:i:2:d:10.1007_s11166-018-9272-8 is not listed on IDEAS
    3. David Bradford & Charles Courtemanche & Garth Heutel & Patrick McAlvanah & Christopher Ruhm, 2017. "Time preferences and consumer behavior," Journal of Risk and Uncertainty, Springer, vol. 55(2), pages 119-145, December.

    More about this item

    Keywords

    Risk and time; Discounting; Risk aversion; Domain differences; Environmental domain;

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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