Abstract
Recent research on intertemporal choice (e.g., Ainslie, 1991; Herrnstein,
1990; Loewenstein & Elster, 1992) exhibits several pervasive effects that are
Incompatible with the basic tenets of the "rational’ or "normative" economic theory.
In particular, people show time-inconsistent preferences when asked to choose
between payoffs occurring at different moments in time. Following an example from
Herrnstein (1990), our first experiment demonstrates such time-inconsistent
preferences. Using a present time perspective the majority of subjects portrayed a
positive time preference by choosing the smaller but more immediate payoff; In
contrast, when a future time perspective was employed (delaying all possible
outcomes by a constant duration) most subjects portrayed a negative time preference
for identical payoffs. Two additional experiments tested the robustness of this effect
by (1) using an isolation procedure (Kahneman and Tversky, 1979), and (2)
manipulating the certainty associated with the payoffs. Our results suggest that
time-inconsistent preferences, as described by Herrnstein, can be interpreted as an
analog of the certainty-effect (Kahneman & Tversky, 1979) in the time domain.
Original language | English |
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Title of host publication | Contributions to decision making - I |
Editors | J.-P. Caverni, M. Bar-Hillel, F. Hutton Barron, H. Jungermann |
Place of Publication | Amsterdam |
Publisher | Elsevier |
Pages | 351-361 |
ISBN (Print) | 0-444-82811-3 |
Publication status | Published - 1995 |
Event | conference; Research conference on subjective probability, utility and decision making - Duration: 1 Jan 1995 → … |
Conference
Conference | conference; Research conference on subjective probability, utility and decision making |
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Period | 1/01/95 → … |
Other | Research conference on subjective probability, utility and decision making |