Regensburg 2022 – wissenschaftliches Programm

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SOE: Fachverband Physik sozio-ökonomischer Systeme

SOE 3: Economic Models

SOE 3.3: Vortrag

Montag, 5. September 2022, 11:00–11:15, H11

Risk Preferences in Time Lotteries — Yonatan Berman¹ and •Mark Kirstein² — ¹King's College London — ²Max Planck Institute for Mathematics in the Sciences, Leipzig

An important but understudied question in economics is how people choose when facing uncertainty in the timing of events. Here we study preferences over time lotteries, in which the payment amount is certain but the payment time is uncertain. Expected discounted utility theory (EDUT) predicts decision makers to be risk-seeking over time lotteries. We explore a normative model of growth-optimality, in which decision makers maximise the long-term growth rate of their wealth as suggested by the framework of ergodicity economics. Revisiting experimental evidence on time lotteries, we find that growth-optimality accords better with the evidence than EDUT. We outline future experiments to scrutinise further the plausibility of growth-optimality.