Work

Random Discounted Expected Utility

Year: 2024

Type: article

Abstract: This paper introduces the random discounted expected utility (R-DEU) model, which we have developed as a means to deal with heterogeneous risk and time preferences. The R-DEU model provides an explicit linkage between preference and choice heterogeneity. We prove it has solid comparative statics, discuss its identification, and demonstrate its computational convenience. Finally, we use two distinct experimental datasets to illustrate the advantages of the R-DEU model over common alternatives for estimating heterogeneity in preferences across individuals.

Source: The Review of Economics and Statistics

DOI: 10.1162/rest_a_01495

Authors: Jose Apesteguia, Miguel A. Ballester, Ángelo Gutiérrez-daza

Institutions: Institució Catalana de Recerca i Estudis Avançats, Universitat Pompeu Fabra, University of Oxford, Bank of Mexico

Language: English

Topic: Decision-Making and Behavioral Economics

Subfield: General Decision Sciences

Field: Decision Sciences

Domain: Social Sciences

Open Access status: green

Funder: Balliol College, University of Oxford

OpenAlex ID: W4402839877