Agent Behavior under Risky and Uncertain Conditions. An Empirical Verification of Irving Fisher’s Notion of Time Preference
Irving Fisher's theory on time preference in the 1930s arguably influenced the analysis of agents' current behavior with respect to future outcomes. By suggesting linear discount rates implying rational and self-interested motives of agents, Fisher substantiated neoclassical economic thinking. However, Fisher's notion of time preference, the choice between present and future enjoyment that actually integrates a psychological discounting component has not received similar attention in the scholarly literature. This paper aims at closing this gap. It empirically examines agent behavior under uncertain conditions culminating from natural shocks, and differentiates the psychic from the physical component. To empirically test Fisher's notion of time preference, we analyze disaster households from the 1986 Lake Nyos natural shock in rural Cameroon. We look at differences in incomes for impatient households, who illegally moved back to the disaster area and more patient and stationary households in official resettlement camps. Results show that, contrary to Fisher's contention, wealth is positively correlated with impatience. Households in the disaster zone display higher incomes than stationary ones. This finding assumes that differences in incomes existed before the movement. The results lead us to conclude that Irving Fisher's theory is only partially relevant in explaining agent behavior under conditions of risk and uncertainty. Partiality is attributed by the finding that impatience was rather positively correlated with income, with the exception of social capital. The results lead us to conclude that Irving Fisher's theory is only partially relevant in explaining agent behavior under conditions of risk and uncertainty.
|Date of creation:||2011|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.eaae.org|
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ags:eaae11:114214. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.