Internal and External Validity of Experimental Risk and Time Preferences

Loading...
Thumbnail Image

Date

2016-10-31

Journal Title

Journal ISSN

Volume Title

Repository Usage Stats

172
views
161
downloads

Abstract

Using a unique field experiment from Canada, we estimate individual preference over risk and time and show considerable heterogeneity in both dimensions and relatively stable distributions across our various specifications, which include hyperbolic, quasi-hyperbolic discounting as well as subjective failure probability over future payments. We investigate the prediction power (transportability) of the estimated preference parameters when used to explain the take-up decision of higher education grants where financial stakes are approximately seven to fifty times larger than the cash transfers used to elicit preferences. We find that both long-run discount factors and subjective payment failure risk parameters have a high degree of transportability across tasks, while parameters characterizing short-run discount preferences are irrelevant when considering higher-stakes decisions.

Department

Description

Provenance

Citation


Material is made available in this collection at the direction of authors according to their understanding of their rights in that material. You may download and use these materials in any manner not prohibited by copyright or other applicable law.