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Measuring Time and Risk Preferences: Realiability, Stability, Domain Specificity

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  • Eva Wölbert
  • Arno Riedl

Abstract

To accurately predict behavior economists need reliable measures of individual time preferences and attitudes toward risk and typically need to assume stability of these characteristics over time and across decision domains. We test the reliability of two choice tasks for eliciting discount rates, risk aversion, and probability weighting and assess the stability of these characteristics over time and across situations. We find high reliability and that individual characteristics are remarkably stable over time. The estimated parameters correlate well with self-reported decisions in financial domains, but are largely uncorrelated with decisions in other important life domains involving intertemporal trade-offs and risk.

Suggested Citation

  • Eva Wölbert & Arno Riedl, 2013. "Measuring Time and Risk Preferences: Realiability, Stability, Domain Specificity," CESifo Working Paper Series 4339, CESifo.
    • Handle: RePEc:ces:ceswps:_4339
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    More about this item

    Keywords

    time discounting; risk aversion; probability weighting; reliability; stability; domain specificity; experiment;
    All these keywords.

    JEL classification:

    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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