Are time preferences for risky outcomes, riskless outcomes and commodities really different?

This paper suggests that part of the implied time Subjective Discount Rate (SDR) collected by Willingness To Pay (WTP) is an immediate premium. We offer a theoretical and experimental analysis of the gross SDR, which consists of the immediate premium and the net SDR (i.e., SDR less the immediate premium). We find that the net SDR for an assured monetary payment is no different than the SDR for a lottery or USB stick. However, the gross SDR for the assured outcome is higher than the SDR for a lottery or the USB stick.

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Year of publication:	2013
Authors:	Shavit, Tal ; Benzion, Uri ; Shapir, Offer Moshe ; Galil, Koresh
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 118.2013, 3, p. 512-514
Publisher:	Elsevier
Subject:	Time-preference \| Risk \| WTP \| SDR

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Type of publication:	Article
Classification:	C91 - Laboratory, Individual Behavior ; E43 - Determination of Interest Rates; Term Structure Interest Rates
Source:	RePEc - Research Papers in Economics

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