Decision-Making When Things Are Only a Matter of Time

26 Pages Posted: 14 Oct 2015 Last revised: 19 Aug 2019

Date Written: August 19, 2019


This article gives a comprehensive treatment of preferences regarding time risk—the risk of something happening sooner or later—within the expected discounted utility model. We characterize the signs of the discount function’s derivatives of all orders and show how these signs are decisive for time risk preferences. We introduce the notions of prudent and temperate discounting, and illustrate their importance for economic behavior. Several applications in which an important event is “only a matter of time” are presented. The seminal net present value rule to evaluate investment opportunities is generalized to take into account the timing uncertainty of cash flows.

Keywords: risk preferences; time preferences; time risk preferences; prudent discounting

JEL Classification: D81; D90

Suggested Citation

Ebert, Sebastian, Decision-Making When Things Are Only a Matter of Time (August 19, 2019). Available at SSRN: or

Sebastian Ebert (Contact Author)

Heidelberg University ( email )

Grabengasse 1
Heidelberg, 69117
06221543443 (Phone)
69115 (Fax)

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