Risk Preferences Are Not Time Preferences: Comment
Andreoni and Sprenger (in press) report evidence that distinct utility functions govern choices under certainty and risk. I investigate the robustness of their result to the experimental design. I find that the effect disappears completely when a multiple price list is used instead of a convex time budget design. Also, the effect is reduced by half when sooner and later payment risks are realized using a single lottery instead of two independent lotteries. The result is thus partially driven by intertemporal diversification, suggesting an explanation in terms of concavity of the intertemporal, and not only the atemporal, utility function.
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- James C. Cox & Vjollca Sadiraj & Ulrich Schmidt, 2011.
"Paradoxes and Mechanisms for Choice under Risk,"
Kiel Working Papers
1712, Kiel Institute for the World Economy.
- James C. Cox & Vjollca Sadiraj & Ulrich Schmidt, 2011. "Paradoxes and Mechanisms for Choice under Risk," Experimental Economics Center Working Paper Series 2011-07, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University, revised Mar 2014.
- Steffen Andersen & Glenn W. Harrison & Morten Lau & Elisabet E. Rutstroem, 2011. "Intertemporal Utility and Correlation Aversion," Working Papers 2011_03, Durham University Business School.
- James Andreoni & Charles Sprenger, 2010.
"Risk Preferences Are Not Time Preferences,"
Levine's Working Paper Archive
814577000000000452, David K. Levine.
- Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
- Glenn W. Harrison & J. Todd Swarthout, 2011. "Can Intertemporal Choice Experiments Elicit Time Preferences for Consumption? Yes," Experimental Economics Center Working Paper Series 2011-09, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
- Steffen Andersen & Glenn W. Harrison & Morten I. Lau & E. Elisabet Rutström, 2008. "Eliciting Risk and Time Preferences," Econometrica, Econometric Society, vol. 76(3), pages 583-618, 05.
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