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The heterogeneity of time–risk tradeoffs
Author(s) -
Chesson Harrell,
Viscusi W. Kip
Publication year - 2000
Publication title -
journal of behavioral decision making
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.136
H-Index - 76
eISSN - 1099-0771
pISSN - 0894-3257
DOI - 10.1002/(sici)1099-0771(200004/06)13:2<251::aid-bdm328>3.0.co;2-p
Subject(s) - economics , rationality , context (archaeology) , econometrics , time horizon , time preference , preference , sample (material) , discounting , microeconomics , finance , paleontology , chemistry , chromatography , political science , law , biology
This paper uses an original sample of 146 business managers to examine the rationality of choices with respect to deferred lotteries. Using a new empirical methodology, it explicitly estimates implicit rates of time preference with respect to these deferred gambles. The estimated discount rate decreases with the time horizon of the gamble, which is consistent with violations observed in discounted utility contexts. Cigarette smokers exhibit lower estimated discount rates in this context, which is contrary to many popular hypotheses about the economic causes of smoking behavior. Copyright © 2000 John Wiley & Sons, Ltd.