Measuring time and risk preferences: Reliability, stability, domain specificity

E.M. Wölbert, A.M. Riedl

Research output: Working paperProfessional

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Abstract

To accurately predict behavior economists need reliable measures of individual time preferences and attitudes toward risk and typically need to assume stability of these characteristics over time and across decision domains. We test the reliability of two choice tasks for eliciting discount rates, risk aversion, and probability weighting and assess the stability of these characteristics over time
and across situations. We find high reliability and that individual characteristics are remarkably stable over time. The estimated parameters correlate well with self-reported decisions in financial domains, but are largely uncorrelated with decisions in other important life domains involving intertemporal trade-offs and risk.
Original languageEnglish
Place of PublicationMaastricht
PublisherMaastricht University, Graduate School of Business and Economics
DOIs
Publication statusPublished - 1 Jan 2013

Publication series

SeriesGSBE Research Memoranda
Number041

Cite this

Wölbert, E. M., & Riedl, A. M. (2013). Measuring time and risk preferences: Reliability, stability, domain specificity. Maastricht University, Graduate School of Business and Economics. GSBE Research Memoranda, No. 041 https://doi.org/10.26481/umagsb.2013041