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Journal Articles Journal of Economic Behavior and Organization Year : 2023

Risking the future? Measuring risk attitudes towards delayed consequences

Abstract

This paper presents an experiment that investigates differences in risk attitudes in decisions with immediate versus delayed consequences. Our experimental design allows to control for the effects of discounting and timing of risk resolution. We show that individuals are more risk tolerant in situations involving delayed consequences. Investigations based on rank-dependent utility show that this finding is mainly driven by probability weighting. More precisely, probability weighting is more elevated for delayed consequences. This suggests an overall increase in decision-makers' optimism regarding the chances of success when consequences materialize in the future.
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Dates and versions

hal-04385738 , version 1 (10-01-2024)

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Emmanuel Kemel, Corina Paraschiv. Risking the future? Measuring risk attitudes towards delayed consequences. Journal of Economic Behavior and Organization, 2023, 208, pp.325-344. ⟨10.1016/j.jebo.2023.02.014⟩. ⟨hal-04385738⟩
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