Please use this identifier to cite or link to this item:
Saito, Kota
Year of Publication: 
Series/Report no.: 
Discussion Paper, Center for Mathematical Studies in Economics and Management Science 1477
This paper investigates a general relationship between risk and time preferences. I consider a decision maker who chooses between consumption of a particular prize in one period and a different prize in another period. The individual believes that today's good is certain, and that, as the promised date for a future good becomes increasingly distant, the probability of his consuming the good decreases. Under these assumptions, this paper shows that the individuals exhibits the common ratio effect, the certainty effect, and the expected utility if and only if he discounts hyperbolically, quasi-hyperbolically and exponentially, respectively.
Allais paradox
hyperbolic discounting
Document Type: 
Working Paper

Files in This Item:
133.48 kB

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.