Gain/Loss Asymmetry in Risky Intertemporal Choice

Shelley, Marjorie K.

doi:10.1006/obhd.1994.1053

Cited by 112 publications

(64 citation statements)

References 15 publications

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“…We also replicate the previous results on the effect of risk over time preferences (i.e., certain outcomes are discounted more than risky ones, as reported by Ahlbrecht & Weber, 1997) and the effect of time over risk preferences (i.e., risk-aversion is less profound in future gambles, as reported by Shelley, 1994).…”

Section: The Effect Of Risk (Time) On Time (Risk) Preferencessupporting

confidence: 81%

“…Shelley (1994) used a managerial investment scenario to examine the changes in risk preferences for immediate and future gains and losses. In the experiment, subjects were presented with a set of lottery-type investment options, where the times and probabilities were manipulated, and were asked to indicate their relative rankings.…”

Section: Previous Experimental Researchmentioning

confidence: 99%

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How do we evaluate future gambles? Experimental evidence on path dependency in risky intertemporal choice

Öncüler

Onay

2008

Behavioral Decision Making

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This study reports three experiments which demonstrate path dependency in risky intertemporal choice. Consider a lottery to be resolved and paid in a future time period. One can obtain the present value of this lottery in three different ways: (1) eliciting directly the present certainty equivalent (CE) of the future lottery (direct path); (2) eliciting the future CE and then discounting this amount to the present (risk-time path); and (3) eliciting the present value of the risky prospect and then determining the CE of this current lottery (time-risk path). Standard rational choice models such as the discounted expected utility model, assume a multiplicative model, where all three methods mentioned above would yield the same value. We conducted three studies to examine if this is the case: Experiments 1 and 2 were based on a set of matching-task questions and Experiment 3 used a process-tracing design to analyze the natural sequence of decision making by the subjects. These three studies show that the evaluation of future gambles is path-dependent. The present values elicited under the time-risk and direct paths are, on average, higher than those reported under the risktime path. In addition, we found evidence for a two-stage evaluation of risky future prospects: When evaluating a future gamble, individuals first assess the present value of the gamble (time discounting) and then they determine a certainty equivalent (probability discounting).

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Section: The Effect Of Risk (Time) On Time (Risk) Preferencessupporting

confidence: 81%

Section: Previous Experimental Researchmentioning

confidence: 99%

How do we evaluate future gambles? Experimental evidence on path dependency in risky intertemporal choice

Öncüler

Onay

2008

Behavioral Decision Making

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show abstract

“…Shelley (1994) and Tanaka, Camerer, and Nguyen (2010) find that a subset of individuals do not display gain/loss asymmetry (or even reverse the asymmetry, acting more inpatient for losses).…”

mentioning

confidence: 99%

Measuring Time Preferences

Cohen¹,

Ericson²,

Laibson³

et al. 2016

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“…For example, studies on the direction effect show that the way alternatives are presented influences people's choices (Shelley, 1993(Shelley, , 1994. In a typical experiment, the participants are divided into two conditions.…”

Section: Intertemporal Choicesmentioning

confidence: 99%