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Risking the future? Measuring risk attitudes towards delayed consequences

Author

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  • Emmanuel Kemel

    (GREGHEC - Groupement de Recherche et d'Etudes en Gestion - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

  • Corina Paraschiv

    (LIRAES (URP_ 4470) - Laboratoire Interdisciplinaire de Recherche Appliquée en Economie de la Santé - UPCité - Université Paris Cité)

Abstract

This paper presents an experiment that investigates differences in risk attitudes in decisions with immediate versus delayed consequences. Our experimental design allows to control for the effects of discounting and timing of risk resolution. We show that individuals are more risk tolerant in situations involving delayed consequences. Investigations based on rank-dependent utility show that this finding is mainly driven by probability weighting. More precisely, probability weighting is more elevated for delayed consequences. This suggests an overall increase in decision-makers' optimism regarding the chances of success when consequences materialize in the future.

Suggested Citation

  • Emmanuel Kemel & Corina Paraschiv, 2023. "Risking the future? Measuring risk attitudes towards delayed consequences," Post-Print hal-04385738, HAL.
    • Handle: RePEc:hal:journl:hal-04385738
    DOI: 10.1016/j.jebo.2023.02.014
    Note: View the original document on HAL open archive server: https://hal.science/hal-04385738
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    Keywords

    Risk Attitudes; Time; Rank Dependent Utility; Delay; Future Consequences;
    All these keywords.

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