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Publication year
Risk Preferences Are Not Time Preferences
Resource type
Authors/contributors
- Andreoni, James (Author)
- Sprenger, Charles (Author)
Title
Risk Preferences Are Not Time Preferences
Abstract
Risk and time are intertwined. The present is known while the futureis inherently risky. This is problematic when studying time preferencessince uncontrolled risk can generate apparently present-biasedbehavior. We systematically manipulate risk in an intertemporalchoice experiment. Discounted expected utility performs well withrisk, but when certainty is added common ratio predictions failsharply. The data cannot be explained by prospect theory, hyperbolicdiscounting, or preferences for resolution of uncertainty, but seemconsistent with a direct preference for certainty. The data suggeststrongly a difference between risk and time preferences. (JEL C91D81 D91)
Publication
American Economic Review
Volume
102
Issue
7
Pages
3357-76
Date
2012-12
Citation
Andreoni, J., & Sprenger, C. (2012). Risk Preferences Are Not Time Preferences. American Economic Review, 102, 3357–3376.
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