title: Is there time discounting for risk premium?
abstract: Individuals with a higher subjective discount rate concentrate more on the present and delay is more significant for them. However, when a risky asset is delayed, not only is the outcome delayed but also the risk. In this paper, we suggest a new, two-stage experimental method with real monetary incentives that allows us to distinguish between the effect of the risk and the effect of the time when pricing a risky asset. We show that when individuals have greater preference for the present, their risk aversion for a risky asset realized in the future decreases. We argue that the effect of the risk for future asset is lower for individuals with higher time preference because they discount not only the outcome but also the risks.
authors.affiliation: The School of Business Administration, The College of Management Academic Studies, Israel.
authors.forename: Tal
authors.initials: T
authors.lastname: Shavit
authors.forename: Mosi
authors.initials: M
authors.lastname: Rosenboim
mesh_terms: D065786:Delay Discounting; D005260:Female; D006801:Humans; D008297:Male; D008960:Models, Psychological; D009042:Motivation; D012201:Reward; D012306:Risk; D013997:Time Factors; D055815:Young Adult
keywords: decision-making process; delay discounting; experiment design; future; human; risk; willingness to pay