Publications

Journal Article

This paper reports two experiments in which attitudes toward temporal risk resolution is elicited from choices between two-outcome lotteries that pay out at some future fixed date and can be resolved either now or later.

The authors show that matching probabilities provides a simple method to measure attitudes toward temporal resolution - via the utility scale - under the recursive expected utility of Kreps and Porteus.

The authors also analyze their data using a general recursive model that can reveal attitudes toward temporal risk resolution through the utility scale and/or the probability weighting scale.

In terms of goodness of fit, as well as of prediction accuracy, the authors' results point to a better performance of the probability weighting approach. More specifically, they show that individuals become less sensitive and more pessimistic with respect to winning probabilities when lotteries are resolved later rather than now.