A Theory of Time Preferences over Risky Outcomes
نویسنده
چکیده
This paper provides two representation theorems for time preferences. They both cover as special cases a variety of time preference models considered in the experimental and theoretical literatures on intertemporal choice. In particular, similarity relations on time and outcomes, exponential, quasi-hyperbolic and hyperbolic discounting are special cases of the theorems. This approach identi es certain factors that are common to time preference structures which look so di¤erent. The paper builds on the recent work by Masatlioglu and Ok (2007) on Euclidean bundles and obtains similar representation theorems for the case of compact, separable and connected spaces of bundles. My work allows for the inclusion of the case in which bundles are lotteries. JEL Classi cation: D11, D90
منابع مشابه
Explaining Heterogeneity in Risk Preferences Using a Finite Mixture Model
This paper studies the effect of the space (distance) between lotteries' outcomes on risk-taking behavior and the shape of estimated utility and probability weighting functions. Previously investigated experimental data shows a significant space effect in the gain domain. As compared to low spaced lotteries, high spaced lotteries are associated with higher risk aversion for high probabilities o...
متن کاملRisk Preferences at Different Time Periods: An Experimental Investigation
I decision making under risk involves two dimensions: time preferences and risk preferences. This paper focuses on the impact of time on risk preferences, independent of the intertemporal trade-off of outcomes, i.e., time preferences. It reports the results of an experimental study that examines how delayed resolution and payment of risky options influence individual choice. We used a simple ex...
متن کاملA Comparison of Portfolio Theory and Weighted Utility Models of Risky Decision Making
Weighted utility models attempt to account for risk preferences in terms of an expectation-like equation applied to the subjective evaluation of probabilities and outcomes, while Portfolio theory assumes that risk preference is a function of expected value and perceived risk. A pair of empirical predictions which contrasts Portfolio theory with all weighted utility models is derived and tested....
متن کاملSolving a nurse rostering problem considering nurses preferences by graph theory approach
Nurse Rostering Problem (NRP) or the Nurse Scheduling Problem (NSP) is a complex scheduling problem that affects hospital personnel on a daily basis all over the world and is known to be NP-hard.The problem is to decide which members of a team of nurses should be on duty at any time, during a rostering period of, typically, one month.It is very important to efficiently utilize time and effort, ...
متن کاملSpaces for agreement: a theory of Time-Stochastic Dominance and an application to climate change
Many investments involve both a long time-horizon and risky returns. Making investment decisions thus requires assumptions about time and risk preferences. Such assumptions are frequently contested, particularly in the public sector, and there is no immediate prospect of universal agreement. Motivated by these observations, we develop a theory and method of finding ‘spaces for agreement’. These...
متن کامل