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Journal of Risk and Uncertainty

, Volume 56, Issue 3, pp 259–287 | Cite as

Estimating representations of time preferences and models of probabilistic intertemporal choice on experimental data

  • Pavlo R. Blavatskyy
  • Hela Maafi
Article

Abstract

We here estimate a number of alternatives to discounted-utility theory, such as quasi-hyperbolic discounting, generalized hyperbolic discounting, and rank-dependent discounted utility with three different models of probabilistic choice. The data come from a controlled laboratory experiment designed to reveal individual time preferences in two rounds of 100 binary-choice problems. Rank-dependent discounted utility and its special case—the maximization of present discounted value—turn out to be the best-fitting theory (for about two-thirds of all subjects). For a great majority of subjects (72%), the representation of time preferences in Luce’s choice model provides the best fit.

Keywords

Intertemporal choice Time preference Discounted utility Quasi-hyperbolic discounting Rank-dependent discounted utility 

JEL Classification

D90 

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Montpellier Business School, Montpellier Research in ManagementMontpellier Cedex 4France
  2. 2.Université Paris 8Saint-DenisFrance

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