Construction of time preference: an investigation of the role of elicitation method in experimental elicitation of time preference
The idea of preference reversal and construction of preference is not new to literature in decision making. Indeed, several theories have been developed to explain it. (Lichtenstein and Slovic, 2006). The present paper considers heuristics activated in different elicitation procedures applied in time preference research. I show that activation of these rules in correspondence with different elicitation methods leads to observation of a particular pattern most frequently reported in time preference literature: hyperbolic discounting. In particular, I analyze two most diffused elicitation procedures, matching task and two variations of choice task in multiple price list format (MPL). In a series of experiments I demonstrate that matching task is characterized by choice of focal amounts and anchoring to previously reported amount. At the same time, choice in MPL format largely depends on the structure of the list from which the choice is made. I study two widely used structures of MPL choice task format: (a) MPL with nominal structure (Green et al, 1997), where choice alternatives correspond to the same nominal amounts that are available at different time horizons; (b) MPL with interest rate structure (Coller and Williams, 1999), in which monetary alternatives at each time horizon in consideration are constructed as increases corresponding to a fixed interest rate. Although these two elicitation structures activate similar decision processes they lead to observation of qualitatively different results that are in large part defined by the underlying structure of the list of alternatives. I show that matching task and MPL with nominal structure lead to observation of hyperbolic evidence, that could be of different kinds depending on the structure of MPL table. At the same time, elicitation with MPL with interest rate structure leads to observation of rather stable time preference that can be well approximated by exponential discounting.
|Date of creation:||Nov 2008|
|Date of revision:||11 Nov 2008|
|Contact details of provider:|| Postal: |
Web page: http://www.unitn.it/disa
More information through EDIRC
|Order Information:|| Postal: DISA Università degli Studi di Trento via Inama, 5 I-38122 Trento TN Italy|
Web: http://www.unitn.it/disa Email:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Steffen Anderson & Glenn Harrison & Morten Lau & Rutstrom Elisabet, 2007. "Valuation using multiple price list formats," Applied Economics, Taylor & Francis Journals, vol. 39(6), pages 675-682.
- 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.
- Anabela Botelho & Glenn W. Harrison & Lígia Costa Pinto & Elisabet E. Rutstrom & Paula Veiga, 2005. "Discounting in developing countries: a pilot experiment in Timor-Leste," NIMA Working Papers 31, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
- Tomomi Tanaka & Colin F. Camerer & Quang Nguyen, 2010. "Risk and Time Preferences: Linking Experimental and Household Survey Data from Vietnam," American Economic Review, American Economic Association, vol. 100(1), pages 557-71, March.
- Laibson, David I., 1997.
"Golden Eggs and Hyperbolic Discounting,"
4481499, Harvard University Department of Economics.
- Slonim, Robert & Carlson, James & Bettinger, Eric, 2007. "Possession and discounting behavior," Economics Letters, Elsevier, vol. 97(3), pages 215-221, December.
- Steffen Andersen & Glenn Harrison & Morten Lau & E. RutstrÃ¶m, 2006.
"Elicitation using multiple price list formats,"
Springer, vol. 9(4), pages 383-405, December.
- Pender, John L., 1996. "Discount rates and credit markets: Theory and evidence from rural india," Journal of Development Economics, Elsevier, vol. 50(2), pages 257-296, August.
- Maribeth Coller & Melonie Williams, 1999. "Eliciting Individual Discount Rates," Experimental Economics, Springer, vol. 2(2), pages 107-127, December.
- Paola Manzini & Marco Mariotti & Luigi Mittone, 2008. "The elicitation of time preferences," CEEL Working Papers 0806, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
When requesting a correction, please mention this item's handle: RePEc:trt:disawp:0808. 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: (Roberto Gabriele)
If references are entirely missing, you can add them using this form.