American Economic Review Vol. 105 No. 7 2015

Comment on “Risk Preferences Are Not Time Preferences”: Separating Risk and Time Preference

Bin Miao¹; Songfa Zhong²

¹ School of Economics, Shanghai University of Finance and Economics; Key Laboratory of Mathematical Economics (SHUFE), Ministry of Education, Shanghai 200433, China (e-mail: ) · ² Department of Economics, National University of Singapore, Singapore (e-mail: )

Abstract

Andreoni and Sprenger (2012a,b) observe that utility functions are distinct for risk and time preferences, and show that their findings are consistent with a preference for certainty. We revisit this question in an enriched experimental setting in which subjects make intertemporal decisions under different risk conditions. The observed choice behavior supports a separation between risk attitude and intertemporal substitution rather than a preference for certainty. We further show that several models, including Epstein and Zin (1989); Chew and Epstein (1990); and Halevy (2008) exhibit such a separation and can account for the overall experimental findings.

DOI

10.1257/aer.20131183

Volume

105

Issue

7

Pages

2272-2286

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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