American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Risk Preferences Are Not Time Preferences: Separating Risk and Time Preference: Comment
American Economic Review
vol. 105,
no. 7, July 2015
(pp. 2272–86)
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. (JEL C91, D81, D91)Citation
Miao, Bin, and Songfa Zhong. 2015. "Risk Preferences Are Not Time Preferences: Separating Risk and Time Preference: Comment." American Economic Review, 105 (7): 2272–86. DOI: 10.1257/aer.20131183Additional Materials
JEL Classification
- C91 Design of Experiments: Laboratory, Individual
- D81 Criteria for Decision-Making under Risk and Uncertainty
- D15 Intertemporal Household Choice; Life Cycle Models and Saving