Intertemporal Prospect Theory
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Series
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Speaker(s)Matthias Weber (University of St. Gallen, Switzerland)
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FieldBehavioral Economics
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LocationUniversity of Amsterdam, Roeterseilandcampus, room E0.03
Amsterdam -
Date and time
April 18, 2023
16:00 - 17:15
Abstract
Prospect Theory is well understood in contexts without a time dimension. In
intertemporal contexts, however, it is unclear how prospect theory
should be applied. In particular, it is unclear whether probabilities
should be weighted within time periods or whether probabilities of
present values should be weighted. Furthermore, it is unclear what
parametric specifications of probability-weighting and value functions
should be used. We find in a pre-registered experiment on a
representative sample that the version weighting probabilities of
present values predicts decisions best. Estimated probability weighting
functions are inverse-S shaped, and value functions are almost linear.
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