Year: 2018
Type: article
Abstract: Discounted Expected Utility theory has been a workhorse in economic analysis for over half a century. However, it cannot explain empirical violations of 'dimensional independence' demonstrating that risk interacts with time preference and time interacts with risk preference, nor does it explain present bias or magnitude-dependence in risk and time preferences, or correlations between risk preference, time preference, and cognitive reflection. We demonstrate that these and other anomalies are explained by a dual system model of risk and time preferences that unless models of a rational economic agent, models based on prospect theory, and dual process models of decision making.
Author: Mark Schneider
Language: English
Subfield: General Decision Sciences
Field: Decision Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2934178613