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Once Upon a Time Preference - How Rationality and Risk Aversion Change the Rationale for Discounting

Traeger, Christian - CESifo - 2012

The paper develops an axiomatic framework for rational decision making. The von Neumann-Morgenstern axioms give rise to a richer risk attitude than that captured in the standard discounted expected utility model. I derive three models that permit a more comprehensive risk evaluation. These...

Persistent link: https://www.econbiz.de/10010544183

Risk Aversion and the Subjective Time Discount Rate: A Joint Approach

Praag, Bernard M.S. van; Booij, Adam S. - CESifo - 2003

In this paper we analyze a large sample of individual responses to six lottery questions. We derive a simultaneous estimate of risk aversion and the time preference discount rate per individual. This can be done because the consumption of a large prize is smoothed over a larger time period. It...

Persistent link: https://www.econbiz.de/10005416458

The Relationship between Economic Preferences and Psychological Personality Measures

Becker, Anke; Deckers, Thomas; Dohmen, Thomas; Falk, Armin - CESifo - 2012

Although both economists and psychologists seek to identify determinants of heterogeneity in behavior, they use different concepts to capture them. In this review we first analyze the extent to which economic preferences and psychological concepts of personality - such as the Big Five and locus...

Persistent link: https://www.econbiz.de/10010877971

Interpreting Time Horizon Effects in Inter-Temporal Choice

Dohmen, Thomas; Falk, Armin; Huffman, David; Sunde, Uwe - CESifo - 2012

We compare different designs that have been used to test for an impact of time horizon on discounting, using real incentives and two representative data sets. With the most commonly used type of design we replicate the typical finding of declining (hyperbolic) discounting, but with other designs...

Persistent link: https://www.econbiz.de/10009651859

Trading Off Generations: Infinitely Lived Agent Versus OLG

Schneider, Maik T.; Traeger, Christian; Winkler, Ralph - CESifo - 2012

The prevailing literature discusses intergenerational trade-offs in climate change predominantly in terms of the Ramsey equation relying on the infinitely lived agent model. We discuss these trade-offs in a continuous time OLG framework and relate our results to the infinitely lived agent...

Persistent link: https://www.econbiz.de/10009649700

Are Risk Aversion and Impatience Related to Cognitive Ability?

Dohmen, Thomas; Falk, Armin; Huffman, David; Sunde, Uwe - CESifo - 2009

This paper investigates whether risk aversion and impatience are correlated with cognitive ability. We conduct incentive compatible choice experiments measuring risk aversion, and impatience over an annual time horizon, for a representative sample of roughly 1,000 German adults. A measure of...

Persistent link: https://www.econbiz.de/10005000392

Collective Investment Decision Making with Heterogeneous Time Preferences

Gollier, Christian; Zeckhauser, Richard - CESifo - 2003

We examine the investment decision problem of a group whose members have heterogeneous time preferences. In particular, they have different discount factors for utility, possibly not exponential. We characterize the properties of efficient allocations of resources and of shadow prices that would...

Persistent link: https://www.econbiz.de/10005181613

The Agricultural Origins of Time Preference

Galor, Oded; Özak, Ömer - CESifo - 2015

This research explores the origins of the distribution of time preference across regions. It advances the hypothesis, and establishes empirically that geographical variations in the natural return to agricultural investment have had a persistent effect on the distribution of time preference...

Persistent link: https://www.econbiz.de/10011167137

Recession Depression: Mental Health Effects of the 2008 Stock Market Crash

McInerney, Melissa; Mellor, Jennifer M.; Nicholas, … - CESifo - 2013

How do sudden, large wealth losses affect mental health? Most prior studies of the causal effects of material well … market accumulations may not inform this question if the effect of wealth on health is asymmetric. We use exogenous variation … in the interview dates of the 2008 Health and Retirement Study to assess the impact of large wealth losses on mental …

Persistent link: https://www.econbiz.de/10010877960

Consumption, Wealth, Stock and Housing Returns: Evidence from Emerging Markets

Caporale, Guglielmo Maria; Sousa, Ricardo M. - CESifo - 2011

consumption, aggregate wealth, and labour income should predict both stock returns and housing returns. We use quarterly data for … wealth held in the form of housing (i.e., when stock and housing assets are substitutes), then they will temporarily reduce …

Persistent link: https://www.econbiz.de/10009325810