IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/24075.html
   My bibliography  Save this paper

A Stream of Prospects or a Prospect of Streams: On the Evaluation of Intertemporal Risks

Author

Listed:
  • James Andreoni
  • Paul Feldman
  • Charles Sprenger

Abstract

Recent debate has identified important gaps in the understanding of intertemporal risks. Critical to closing these gaps is evidence on which dimension of intertemporal risk – the risk or the time – is evaluated first. Though under discounted expected utility this ordering is of no consequence, under discounted non-expected utility models the order of evaluation is critical. We provide experimental tests in which different orderings of evaluation generate different predictions for behavior. We find more support for the notion that the risk dimension is evaluated first.

Suggested Citation

  • James Andreoni & Paul Feldman & Charles Sprenger, 2017. "A Stream of Prospects or a Prospect of Streams: On the Evaluation of Intertemporal Risks," NBER Working Papers 24075, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:24075
    Note: PE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w24075.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mark B. Stewart, 1983. "On Least Squares Estimation when the Dependent Variable is Grouped," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 50(4), pages 737-753.
    2. Starmer, Chris & Sugden, Robert, 1991. "Does the Random-Lottery Incentive System Elicit True Preferences? An Experimental Investigation," American Economic Review, American Economic Association, vol. 81(4), pages 971-978, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Patrick DeJarnette & David Dillenberger & Daniel Gottlieb & Pietro Ortoleva, 2020. "Time Lotteries and Stochastic Impatience," Econometrica, Econometric Society, vol. 88(2), pages 619-656, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. B. Douglas Bernheim & Charles Sprenger, 2020. "On the Empirical Validity of Cumulative Prospect Theory: Experimental Evidence of Rank‐Independent Probability Weighting," Econometrica, Econometric Society, vol. 88(4), pages 1363-1409, July.
    2. Galliera, Arianna, 2018. "Self-selecting random or cumulative pay? A bargaining experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 72(C), pages 106-120.
    3. T.R.L. Fry & R.D. Brooks & Br. Comley & J. Zhang, 1993. "Economic Motivations for Limited Dependent and Qualitative Variable Models," The Economic Record, The Economic Society of Australia, vol. 69(2), pages 193-205, June.
    4. Kirchler, Michael & Lindner, Florian & Weitzel, Utz, 2020. "Delegated investment decisions and rankings," Journal of Banking & Finance, Elsevier, vol. 120(C).
    5. Lohse, Johannes & Goeschl, Timo & Diederich , Johannes, 2014. "Giving is a question of time: Response times and contributions to a real world public good," Working Papers 0566, University of Heidelberg, Department of Economics.
    6. Esteban Aucejo & Jonathan James, 2021. "The Path to College Education: The Role of Math and Verbal Skills," Journal of Political Economy, University of Chicago Press, vol. 129(10), pages 2905-2946.
    7. Steffen Huck & Wieland Müller, 2012. "Allais for all: Revisiting the paradox in a large representative sample," Journal of Risk and Uncertainty, Springer, vol. 44(3), pages 261-293, June.
    8. Sandy Tubeuf & Marc Perronnin, 2008. "New prospects in the analysis of inequalities in health: a measurement of health encompassing several dimensions of health," Health, Econometrics and Data Group (HEDG) Working Papers 08/01, HEDG, c/o Department of Economics, University of York.
    9. Yaron Azrieli & Christopher P. Chambers & Paul J. Healy, 2020. "Incentives in experiments with objective lotteries," Experimental Economics, Springer;Economic Science Association, vol. 23(1), pages 1-29, March.
    10. Mohammed Abdellaoui & Peter Klibanoff & Lætitia Placido, 2015. "Experiments on Compound Risk in Relation to Simple Risk and to Ambiguity," Management Science, INFORMS, vol. 61(6), pages 1306-1322, June.
    11. P.W. Miller & S. Rummery, 1989. "Gender Wage Discrimination in Australia: A reassessment," Economics Discussion / Working Papers 89-21, The University of Western Australia, Department of Economics.
    12. Meier, Stephan & Sprenger, Charles D., 2013. "Discounting financial literacy: Time preferences and participation in financial education programs," Journal of Economic Behavior & Organization, Elsevier, vol. 95(C), pages 159-174.
    13. Mattias Vesterberg and Chandra Kiran B. Krishnamurthy, 2016. "Residential End-use Electricity Demand: Implications for Real Time Pricing in Sweden," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    14. James C. Cox & Vjollca Sadiraj, 2018. "Incentives," Experimental Economics Center Working Paper Series 2018-01, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
    15. Jakus, Paul M. & Jensen, Kimberly L. & Davis, George C., 2003. "Revenue Impacts of MPP Branded Funds: A Firm-Level Analysis," Agricultural and Resource Economics Review, Cambridge University Press, vol. 32(2), pages 184-197, October.
    16. Enrico Diecidue & Peter Wakker & Marcel Zeelenberg, 2007. "Eliciting decision weights by adapting de Finetti’s betting-odds method to prospect theory," Journal of Risk and Uncertainty, Springer, vol. 34(3), pages 179-199, June.
    17. Banerjee, Priyodorshi & Das, Tanmoy, 2019. "Simultaneous decisions under risk: An experimental investigation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 82(C).
    18. Andrew Pendleton & Alex Bryson & Howard Gospel, 2017. "Ownership and Pay in Britain," British Journal of Industrial Relations, London School of Economics, vol. 55(4), pages 688-715, December.
    19. Butler, D. J., 2000. "Do non-expected utility choice patterns spring from hazy preferences? An experimental study of choice 'errors'," Journal of Economic Behavior & Organization, Elsevier, vol. 41(3), pages 277-297, March.
    20. Urwin, Sean & Lau, Yiu-Shing & Grande, Gunn & Sutton, Matt, 2021. "The extent and predictors of discrepancy between provider and recipient reports of informal caregiving," Social Science & Medicine, Elsevier, vol. 277(C).

    More about this item

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:24075. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.