A Stream of Prospects or a Prospect of Streams: On the Evaluation of Intertemporal Risks
54 Pages Posted: 6 Dec 2017 Last revised: 13 Oct 2024
Date Written: November 2017
Abstract
Recent debate has identified important gaps in the understanding of intertemporal risks. Critical to closing these gaps is evidence on which dimension of intertemporal risk – the risk or the time – is evaluated first. Though under discounted expected utility this ordering is of no consequence, under discounted non-expected utility models the order of evaluation is critical. We provide experimental tests in which different orderings of evaluation generate different predictions for behavior. We find more support for the notion that the risk dimension is evaluated first.
Suggested Citation: Suggested Citation
Andreoni, James and Feldman, Paul and Sprenger, Charles, A Stream of Prospects or a Prospect of Streams: On the Evaluation of Intertemporal Risks (November 2017). NBER Working Paper No. w24075, Available at SSRN: https://ssrn.com/abstract=3082256
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