Regensburg 2022 – scientific programme
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SOE: Fachverband Physik sozio-ökonomischer Systeme
SOE 3: Economic Models
SOE 3.3: Talk
Monday, September 5, 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.