[ { "id": "authors:2mgbm-6jh97", "collection": "authors", "collection_id": "2mgbm-6jh97", "cite_using_url": "https://authors.library.caltech.edu/records/2mgbm-6jh97", "type": "article", "title": "Distinguishing Common Ratio Preferences from Common Ratio Effects Using Paired Valuation Tasks", "author": [ { "family_name": "McGranaghan", "given_name": "Christina", "orcid": "0000-0002-8577-9038" }, { "family_name": "Nielsen", "given_name": "Kirby", "orcid": "0000-0003-4536-1021", "clpid": "Nielsen-Kirby" }, { "family_name": "O'Donoghue", "given_name": "Ted" }, { "family_name": "Somerville", "given_name": "Jason", "orcid": "0000-0002-6980-1469" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "Without strong assumptions about how noise manifests in choices, we can infer little from existing empirical observations of the common ratio effect (CRE) about whether there exists an underlying common ratio preference (CRP). We propose to solve this inferential challenge using paired valuations, which yield valid inference under common assumptions. Using this approach in an online experiment with 900 participants, we find no evidence of a systematic CRP. To reconcile our findings with existing evidence, we present the same participants with paired choice tasks and demonstrate how noise can generate a CRE even for individuals without an associated CRP. (JEL C91, D81, D91)", "doi": "10.1257/aer.20221535", "issn": "0002-8282", "publisher": "American Economic Association", "publication": "American Economic Review", "publication_date": "2024-02", "series_number": "2", "volume": "114", "issue": "2", "pages": "307-347" }, { "id": "authors:kpxr5-tf279", "collection": "authors", "collection_id": "kpxr5-tf279", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20230103-818063100.61", "type": "article", "title": "Procrastination in the Field: Evidence from Tax Filing", "author": [ { "family_name": "Martinez", "given_name": "Seung-Keun", "clpid": "Martinez-Seung-Keun" }, { "family_name": "Meier", "given_name": "Stephan", "orcid": "0000-0001-6726-9731", "clpid": "Meier-Stephan" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "Understanding the structure of time preferences allows for accurate predictions of the effects of changing intertemporal incentives. Behavioral models of present bias are used to rationalize field data seemingly at odds with exponential discounting, leveraging additional degrees of freedom to improve in-sample fit. Largely lacking to date are the critical out-of-sample tests necessary to ensure predictive accuracy. This paper contrasts exponential discounting with present-biased procrastination for around 22,000 tax filers, advancing the literature in this domain by providing novel out-of-sample tests for both theories. Present bias provides qualitatively better in-sample fit, matching substantial increases in filing probability as the tax deadline approaches. Present bias also has improved out-of-sample predictive power for responsiveness to the 2008 Stimulus Act, and experimental data demonstrate a link between present bias and filing times. Without present bias, predicted responses to changed incentives are inaccurate, demonstrating its necessity in research and policy applications.", "doi": "10.1093/jeea/jvac067", "issn": "1542-4766", "publisher": "European Economic Association", "publication": "Journal of the European Economic Association", "publication_date": "2023-02-08" }, { "id": "authors:ba53e-5dm25", "collection": "authors", "collection_id": "ba53e-5dm25", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20230113-708423000.11", "type": "article", "title": "Using Preference Estimates to Customize Incentives: An Application to Polio Vaccination Drives in Pakistan", "author": [ { "family_name": "Andreoni", "given_name": "James", "orcid": "0000-0003-0679-2371", "clpid": "Andreoni-James" }, { "family_name": "Callen", "given_name": "Michael", "orcid": "0000-0002-8408-1404", "clpid": "Callen-Michael" }, { "family_name": "Hussain", "given_name": "Karrar", "orcid": "0000-0001-8242-7590", "clpid": "Hussain-Karrar" }, { "family_name": "Khan", "given_name": "Muhammad Yasir", "orcid": "0000-0001-8685-9892", "clpid": "Khan-Muhammad-Yasir" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "We use estimates of time preferences to customize incentives for polio vaccinators in Lahore, Pakistan. We measure time preferences using intertemporal allocations of effort, and use these estimates to construct individually tailored incentives. We evaluate the effect of matching contract terms to discounting parameters in a subsequent experiment with the same vaccinators. Our tailored policy is compared with alternatives that either rely on atheoretic reduced-form relationships for policy guidance or apply the same policy to all individuals. We find that contracts tailored to individual discounting outperform this range of policy alternatives.", "doi": "10.1093/jeea/jvac068", "issn": "1542-4766", "publisher": "European Economic Association", "publication": "Journal of the European Economic Association", "publication_date": "2023-01-31" }, { "id": "authors:3xj6v-zz971", "collection": "authors", "collection_id": "3xj6v-zz971", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20220808-886761000", "type": "article", "title": "Robustness of Rank Independence in Risky Choice", "author": [ { "family_name": "Bernheim", "given_name": "B. Douglas", "clpid": "Bernheim-B-Douglas" }, { "family_name": "Royer", "given_name": "Rebecca", "clpid": "Royer-Rebecca" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "Bernheim and Sprenger (2020) devise and implement a novel test of rank-dependent probability weighting both in general and as formulated in cumulative prospect theory. They reject both hypotheses decisively. Cumulative prospect theory cannot simultaneously account for the rank independence of \"equalizing reductions\" for three-outcome lotteries, which it construes as indicating linear probability weighting, and the relationship between equalizing reductions and probabilities, which it interprets as indicating highly nonlinear probability weighting. In the current paper, we explore the robustness of the first finding, rank independence of equalizing reductions (and hence of decision weights), with respect to alternative experimental procedures.", "doi": "10.1257/pandp.20221090", "issn": "2574-0768", "publisher": "American Economic Association", "publication": "AEA Papers and Proceedings", "publication_date": "2022-05-01", "volume": "112", "pages": "415-420" }, { "id": "authors:asftk-dj102", "collection": "authors", "collection_id": "asftk-dj102", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20220607-425305000", "type": "article", "title": "Intertemporal choice experiments and large-stakes behavior", "author": [ { "family_name": "Aycinena", "given_name": "Diego", "orcid": "0000-0001-6330-5926", "clpid": "Aycinena-Diego" }, { "family_name": "Blazsek", "given_name": "Szabolcs", "orcid": "0000-0002-0394-1258", "clpid": "Blazsek-Szabolcs" }, { "family_name": "Rentschler", "given_name": "Lucas", "orcid": "0000-0001-9470-8752", "clpid": "Rentschler-Lucas" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "Intertemporal choice experiments are increasingly implemented to make inference about discounting and marginal utility, yet little is known about the predictive power of resulting measures. This project links standard experimental choices to a consumption smoothing decision with large stakes \u2014 around 10% of annual income. In a sample of around 400 Guatemalan Conditional Cash Transfer recipients, we find that preferences over large-stakes payment plans are significantly correlated with experimental measures of patience and diminishing marginal utility. These represent the first findings in the literature on the predictive content of such experimentally elicited measures for a large-stakes decision.", "doi": "10.1016/j.jebo.2022.02.011", "issn": "0167-2681", "publisher": "Elsevier", "publication": "Journal of Economic Behavior & Organization", "publication_date": "2022-04", "volume": "196", "pages": "484-500" }, { "id": "authors:59n1w-mpk45", "collection": "authors", "collection_id": "59n1w-mpk45", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200722-085421301", "type": "article", "title": "Dynamic Inconsistency in Food Choice: Experimental Evidence from Two Food Deserts", "author": [ { "family_name": "Sadoff", "given_name": "Sally", "clpid": "Sadoff-S" }, { "family_name": "Samek", "given_name": "Anya", "clpid": "Samek-A" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "We conduct field experiments to investigate dynamic inconsistency and commitment demand in food choice. In two home grocery delivery programs, we document substantial dynamic inconsistency between advance and immediate choices. When given the option to commit to their advance choices, around half of subjects take it up. Commitment demand is negatively correlated with dynamic inconsistency, suggesting those with larger self-control problems are less likely to be aware thereof. We evaluate the welfare consequences of dynamic inconsistency and commitment policies with utility measures based on advance, immediate, and unambiguous choices. Simply offering commitment has limited welfare (and behavioural) consequences under all measures.", "doi": "10.1093/restud/rdz030", "issn": "0034-6527", "publisher": "Oxford University Press", "publication": "Review of Economic Studies", "publication_date": "2020-07", "series_number": "4", "volume": "87", "issue": "4", "pages": "1954-1988" }, { "id": "authors:40h5v-w7372", "collection": "authors", "collection_id": "40h5v-w7372", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200727-101446329", "type": "publication_workingpaper", "title": "Heterogeneity of Gain-Loss Attitudes and Expectations-Based Reference Points", "author": [ { "family_name": "Goette", "given_name": "Lorenz", "clpid": "Goette-L" }, { "family_name": "Graeber", "given_name": "Thomas", "clpid": "Graeber-T-G" }, { "family_name": "Kellogg", "given_name": "Alexandre", "clpid": "Kellogg-A" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "This project examines the role of heterogeneity in gain-loss attitudes for identifying models of expectations-based reference dependence (Koszegi and Rabin, 2006, 2007) (KR). Different gain-loss attitudes lead to different signs for KR comparative statics. Failure to account for the known heterogeneity in gain-loss attitudes is a central confounding factor challenging prior tests of the KR model conducted under the assumption of universal loss aversion. We document heterogeneous treatment effects over gain-loss types in both an initial experiment and an exact replication. Recognizing heterogeneity over types allows us to both recover the KR model's central predictions, and account for inconsistency across prior empirical tests.", "doi": "10.2139/ssrn.3589906", "publisher": "SSRN Electronic Journal", "publication_date": "2020-05-20" }, { "id": "authors:1c9m0-j7r21", "collection": "authors", "collection_id": "1c9m0-j7r21", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200721-142739420", "type": "publication_workingpaper", "title": "On the Empirical Validity of Cumulative Prospect Theory: Experimental Evidence of Rank-Independent Probability Weighting", "author": [ { "family_name": "Bernheim", "given_name": "B. Douglas", "clpid": "Bernheim-B-D" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "Cumulative Prospect Theory (CPT), the leading behavioral account of decision making under uncertainty, avoids the dominance violations implicit in Prospect Theory (PT) by assuming that the probability weight applied to a given outcome depends on its ranking. We devise a simple and direct non-parametric method for measuring the change in relative probability weights resulting from a change in payoff ranks. We find no evidence that these weights are even modestly sensitive to ranks. Conventional calibrations of CPT preferences imply that the percentage change in probability weights should be an order of magnitude larger than we observe. It follows either that probability weighting is not rank-dependent, or that the weighting function is nearly linear. Non-parametric measurement of the change in relative probability weights resulting from changes in probabilities rules out the second possibility. Additional tests nevertheless indicate that the dominance patterns predicted by PT do not arise. We reconcile these findings by positing a form of complexity aversion that generalizes the well-known certainty effect.", "doi": "10.2139/ssrn.3350196", "publisher": "SSRN Electronic Journal", "publication_date": "2020-01-17" }, { "id": "authors:93vvb-bkj06", "collection": "authors", "collection_id": "93vvb-bkj06", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200727-094512685", "type": "article", "title": "Toward an understanding of the development of time preferences: Evidence from field experiments", "author": [ { "family_name": "Andreoni", "given_name": "James", "clpid": "Andreoni-J" }, { "family_name": "Kuhn", "given_name": "Michael A.", "orcid": "0000-0002-0631-7514", "clpid": "Kuhn-Michael-A" }, { "family_name": "List", "given_name": "John A.", "clpid": "List-J-A" }, { "family_name": "Samek", "given_name": "Anya", "orcid": "0000-0003-0908-3079", "clpid": "Samek-A" }, { "family_name": "Sokal", "given_name": "Kevin", "clpid": "Sokal-K" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "Time preferences have been correlated with a range of life outcomes, yet little is known about their early development. We conduct a field experiment to elicit time preferences of over 1200 children ages 3\u201312, who make several intertemporal decisions. To shed light on how such primitives form, we explore various channels that might affect time preferences, from background characteristics to the causal impact of an early schooling program that we developed and operated. Our results suggest that time preferences evolve substantially during this period, with younger children displaying more impatience than older children. We also find a strong association with race: black children, relative to white or Hispanic children, are more impatient. Finally, assignment to different schooling opportunities is not significantly associated with child time preferences.", "doi": "10.1016/j.jpubeco.2019.06.007", "issn": "0047-2727", "publisher": "Elsevier", "publication": "Journal of Public Economics", "publication_date": "2019-09", "volume": "177", "pages": "Art. No. 104039" }, { "id": "authors:j3gq8-5bx11", "collection": "authors", "collection_id": "j3gq8-5bx11", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200722-071826445", "type": "article", "title": "Randomizing Endowments: An Experimental Study of Rational Expectations and Reference-Dependent Preferences", "author": [ { "family_name": "Cerulli-Harms", "given_name": "Annette", "clpid": "Cerulli-Harms-A" }, { "family_name": "Goette", "given_name": "Lorenz", "clpid": "Goette-L" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "We test expectations-based reference dependence in market experiments with probabilistic forced exchange. Koszegi and Rabin (2006) predict that when the probability of forced exchange increases, individuals cannot expect to stick with the status quo, and should grow more willing to exchange. This mechanism may eliminate and even reverse the \"endowment effect\" (Knetsch and Sinden 1984; Kahneman, Knetsch, and Thaler 1990). In a series of experiments with overall 930 subjects, we show some tentative support for the notion that attitudes toward exchange are influenced by the probability of forced exchange. However, the results are sensitive to small changes in experimental design.", "doi": "10.1257/mic.20170271", "issn": "1945-7669", "publisher": "American Economic Association", "publication": "American Economic Journal: Microeconomics", "publication_date": "2019-02", "series_number": "1", "volume": "11", "issue": "1", "pages": "185-207" }, { "id": "authors:sv0a0-sx257", "collection": "authors", "collection_id": "sv0a0-sx257", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200721-134745449", "type": "book_section", "title": "Reference-Dependent Preferences", "book_title": "Handbook of Behavioral Economics: Applications and Foundations", "author": [ { "family_name": "O'Donoghue", "given_name": "Ted", "clpid": "O'Donoghue-T" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "contributor": [ { "family_name": "Bernheim", "given_name": "B. Douglas", "clpid": "Bernheim-B-D" }, { "family_name": "DellaVigna", "given_name": "Stefano", "clpid": "DellaVigna-S" }, { "family_name": "Laibson", "given_name": "David", "clpid": "Laibson-D" } ], "abstract": "In this chapter, we present theories and applications of reference-dependent preferences. We provide some historical perspective, but also move quickly to the current research frontier, focusing on developments in reference dependence over the last 20 years. We present a number of worked examples to highlight the broad applicability of reference dependence. While our primary focus is gain\u2013loss utility, we also provide a short treatment of probability weighting and its links to reference dependence.", "doi": "10.1016/bs.hesbe.2018.07.003", "isbn": "9780444633743", "publisher": "Elsevier", "place_of_publication": "Amsterdam", "publication_date": "2018-09-17", "pages": "1-77" }, { "id": "authors:rnerp-5rh75", "collection": "authors", "collection_id": "rnerp-5rh75", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200722-084620971", "type": "publication_workingpaper", "title": "Heterogeneity of Loss Aversion and Expectations-Based Reference Points", "author": [ { "family_name": "Goette", "given_name": "Lorenz", "clpid": "Goette-L" }, { "family_name": "Graeber", "given_name": "Thomas", "clpid": "Graeber-T-G" }, { "family_name": "Kellogg", "given_name": "Alexandre", "clpid": "Kellogg-A" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "This project examines the role of heterogeneity in loss aversion for identifying models of expectations-based reference dependence (K\u0151szegi and Rabin, 2006, 2007) (KR). Different levels of loss aversion lead to different signs for comparative statics previously used to test the KR model. In an experiment with 607 subjects, we show heterogeneous treatment effects over loss aversion types. Recognizing heterogeneity in loss aversion allows us to reliably recover the KR model's central element of expectations-based reference points. Additional effects are discussed related to the subjective perception of exchange experiences.", "doi": "10.2139/ssrn.3170670", "publisher": "SSRN Electronic Journal", "publication_date": "2018-04-27" }, { "id": "authors:mynjm-2c298", "collection": "authors", "collection_id": "mynjm-2c298", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200722-144742783", "type": "publication_workingpaper", "title": "A Stream of Prospects or a Prospect of Streams: On the Evaluation of Intertemporal Risks", "author": [ { "family_name": "Andreoni", "given_name": "James", "clpid": "Andreoni-J" }, { "family_name": "Feldman", "given_name": "Paul", "clpid": "Feldman-P" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "Recent debate has identified important gaps in the understanding of intertemporal risks. Critical to closing these gaps is evidence on which dimension of intertemporal risk \u2013 the risk or the time \u2013 is evaluated first. Though under discounted expected utility this ordering is of no consequence, under discounted non-expected utility models the order of evaluation is critical. We provide experimental tests in which different orderings of evaluation generate different predictions for behavior. We find more support for the notion that the risk dimension is evaluated first.", "doi": "10.3386/w24075", "publisher": "National Bureau of Economic Research", "publication_date": "2017-11" }, { "id": "authors:mmzrj-vt103", "collection": "authors", "collection_id": "mmzrj-vt103", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200721-151516242", "type": "publication_workingpaper", "title": "Field experiments on the development of time preferences", "author": [ { "family_name": "Andreoni", "given_name": "James", "clpid": "Andreoni-J" }, { "family_name": "Kuhn", "given_name": "Michael", "clpid": "Kuhn-M-A" }, { "family_name": "List", "given_name": "John A.", "clpid": "List-J-A" }, { "family_name": "Samek", "given_name": "Anya", "clpid": "Samek-A" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "Time preferences have been correlated with a range of life outcomes, yet little is known about their early development. We conduct a field experiment to elicit time preferences of nearly 1,000 children ages 3-12, who make several inter temporal decisions. To shed light on how such primitives form, we explore various channels that might affect time preferences, from background characteristics to the causal impact of an early schooling program that we developed and operated. Our results suggest that time preferences evolve substantially during this period with younger children displaying more impatience than older children. We also find a strong association with race: black children, relative to white or Hispanic children, are more impatient. Interestingly, parents of black children are also much more impatient than parents of white and Hispanic children. Finally, assignment to different schooling opportunities is not significantly associated with child time preferences.", "publisher": "Caltech Library", "publication_date": "2017-10" }, { "id": "authors:9n6t7-ycj53", "collection": "authors", "collection_id": "9n6t7-ycj53", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200724-132046804", "type": "article", "title": "The Limits of Expectations-Based Reference Dependence", "author": [ { "family_name": "Gneezy", "given_name": "Uri", "clpid": "Gneezy-U" }, { "family_name": "Goette", "given_name": "Lorenz", "clpid": "Goette-L" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" }, { "family_name": "Zimmermann", "given_name": "Florian", "clpid": "Zimmermann-F" } ], "abstract": "Theories of expectations-based reference-dependent preferences have provided a critical modeling innovation, incorporating a structured theory of the formation of reference points. An important prediction of these models is a monotone response in behavior to changes in expectations. To test such models we conduct a real-effort experiment manipulating expectations and examining consequences on effort provision. In contrast to the theory, we document substantial nonmonotonicities in the effort response to changing expectations. Our results provide some evidence on the limitations of expectations-based reference dependence.", "doi": "10.1093/jeea/jvw020", "issn": "1542-4766", "publisher": "European Economic Association", "publication": "Journal of the European Economic Association", "publication_date": "2017-08", "series_number": "4", "volume": "15", "issue": "4", "pages": "861-876" }, { "id": "authors:enknv-r5836", "collection": "authors", "collection_id": "enknv-r5836", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200721-135422905", "type": "publication_workingpaper", "title": "Procrastination in the Field: Evidence from Tax Filing", "author": [ { "family_name": "Martinez", "given_name": "Seung-Keun", "clpid": "Martinez-Seung-Keun" }, { "family_name": "Meier", "given_name": "Stephan", "clpid": "Meier-S" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "This paper attempts to identify present-biased procrastination in tax filing behavior. Our exercise uses dynamic discrete choice techniques to develop a counterfactual benchmark for filing behavior under the assumption of exponential discounting. Deviations between this counterfactual benchmark and actual behavior provide potential 'missing-mass' evidence of present bias. In a sample of around 22,000 low-income tax filers we demonstrate substantial deviations between exponentially-predicted and realized behavior, particularly as the tax deadline approaches. Present-biased preferences not only provide qualitatively better in-sample fit than exponential discounting, but also have improved out-of-sample predictive power for responsiveness of filing times to the 2008 Economic Stimulus Act recovery payments. Additional experimental data from around 1100 individuals demonstrates a link between experimentally measured present bias and deviations from exponential discounting in tax filing behavior.", "publisher": "Caltech Library", "publication_date": "2017-01-16" }, { "id": "authors:w36r0-cg632", "collection": "authors", "collection_id": "w36r0-cg632", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200727-095123331", "type": "publication_workingpaper", "title": "Using Preference Estimates to Customize Incentives: An Application to Polio Vaccination Drives in Pakistan", "author": [ { "family_name": "Andreoni", "given_name": "James", "clpid": "Andreoni-J" }, { "family_name": "Callen", "given_name": "Michael", "clpid": "Callen-M" }, { "family_name": "Khan", "given_name": "Yasir", "clpid": "Khan-Yasir" }, { "family_name": "Jaffar", "given_name": "Karrar", "clpid": "Jaffar-Karrar" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "We use structural estimates of time preferences to customize incentives for polio vaccinators in Lahore, Pakistan. We measure time preferences using intertemporal allocations of effort, and derive the mapping between these structural estimates and individually optimized incentives. We evaluate the effect of matching contract terms to discounting parameters in a subsequent experiment with the same vaccinators. This exercise provides a test of the specific point predictions given by structural estimates of discounting parameters. We demonstrate that tailoring contract terms to individual discounting moves allocation behavior significantly towards the intended objective.", "doi": "10.3386/w22019", "publication_date": "2016-02" }, { "id": "authors:jsgak-xqf65", "collection": "authors", "collection_id": "jsgak-xqf65", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200721-140740314", "type": "article", "title": "An Endowment Effect for Risk: Experimental Tests of Stochastic Reference Points", "author": [ { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "Recent models of reference-dependent preferences indicate that expectations may play a prominent role in the presence of behavioral anomalies. A subset of such expectations-based models predicts an \"endowment effect for risk\": that risk attitudes differ when reference points change from certain to stochastic. In two purposefully simple risk preference experiments, eliminating often-discussed confounds, I demonstrate both between and within subjects such an endowment effect for risk. These results provide needed separation between expectations-based reference-dependent models, allow for evaluation of recent theoretical extensions, and may help to close a long-standing debate in decision science on inconsistency between utility elicitation methodologies.", "doi": "10.1086/683836", "issn": "0022-3808", "publisher": "University of Chicago Press", "publication": "Journal of Political Economy", "publication_date": "2015-12", "series_number": "6", "volume": "123", "issue": "6", "pages": "1456-1499" }, { "id": "authors:dmskw-2w541", "collection": "authors", "collection_id": "dmskw-2w541", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200722-152510815", "type": "article", "title": "Working over Time: Dynamic Inconsistency in Real Effort Tasks", "author": [ { "family_name": "Augenblick", "given_name": "Ned", "clpid": "Augenblick-N" }, { "family_name": "Niederle", "given_name": "Muriel", "clpid": "Niederle-M" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "Experimental tests of dynamically inconsistent time preferences have largely relied on choices over time-dated monetary rewards. Several recent studies have failed to find the standard patterns of present bias. However, such monetary studies contain often-discussed confounds. In this article, we sidestep these confounds and investigate choices over consumption (real effort) in a longitudinal experiment. We pair this effort study with a companion monetary discounting study. We confirm very limited time inconsistency in monetary choices. However, subjects show considerably more present bias in effort. Furthermore, present bias in the allocation of work has predictive power for demand of a meaningfully binding commitment device. Therefore our findings validate a key implication of models of dynamic inconsistency, with corresponding policy implications.", "doi": "10.1093/qje/qjv020", "issn": "0033-5533", "publisher": "Oxford University Press", "publication": "Quarterly Journal of Economics", "publication_date": "2015-08", "series_number": "3", "volume": "130", "issue": "3", "pages": "1067-1115" }, { "id": "authors:nt403-ytj14", "collection": "authors", "collection_id": "nt403-ytj14", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200721-140005440", "type": "article", "title": "Measuring time preferences: A comparison of experimental methods", "author": [ { "family_name": "Andreoni", "given_name": "James", "clpid": "Andreoni-J" }, { "family_name": "Kuhn", "given_name": "Michael A.", "clpid": "Kuhn-M-A" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "Eliciting time preferences has become an important component of both laboratory and field experiments, yet there is no consensus as how to best measure discounting. We examine the predictive validity of two recent, simple, easily administered, and individually successful elicitation tools: convex time budgets (CTB) and double multiple price lists (DMPL). Using similar methods, the CTB and DMPL are compared using within- and out-of-sample predictions. While each perform equally well within sample, the CTB significantly outperforms the DMPL on out-of-sample measures.", "doi": "10.1016/j.jebo.2015.05.018", "issn": "0167-2681", "publisher": "Elsevier", "publication": "Journal of Economic Behavior & Organization", "publication_date": "2015-08", "volume": "116", "pages": "451-464" }, { "id": "authors:14tft-yzc40", "collection": "authors", "collection_id": "14tft-yzc40", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200724-135233790", "type": "article", "title": "Risk Preferences Are Not Time Preferences: Reply", "author": [ { "family_name": "Andreoni", "given_name": "James", "clpid": "Andreoni-J" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "Can the well-known experimental phenomenon of present-bias in intertemporal choice be confounded with the risks associated with receiving payment? Can measurements of risk preferences be used to represent desires for smoothness in intertemporal payments? In our two 2012 papers in this journal we explored these two questions and found the answer to the first to be yes and the second to be no. We feel the three papers inspired by our work and published here underscore these arguments and point to interesting new possibilities for modeling and measuring risk over time.", "doi": "10.1257/aer.20150311", "issn": "0002-8282", "publisher": "American Economic Association", "publication": "American Economic Review", "publication_date": "2015-07", "series_number": "7", "volume": "105", "issue": "7", "pages": "2287-2293" }, { "id": "authors:ppfxj-whp33", "collection": "authors", "collection_id": "ppfxj-whp33", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200724-131122746", "type": "article", "title": "Temporal Stability of Time Preferences", "author": [ { "family_name": "Meier", "given_name": "Stephan", "clpid": "Meier-S" }, { "family_name": "Sprenger", "given_name": "Charles D.", "clpid": "Sprenger-C-D" } ], "abstract": "The preferences assumed to govern intertemporal trade-offs are generally considered to be stable economic primitives, though evidence on this stability is notably lacking. We present evidence from a large field study conducted over two years, with around 1,400 individuals using incentivized intertemporal choice experiments. Aggregate choice profiles and corresponding estimates of discount parameters are unchanged over the two years and individual correlations through time are high by existing standards. However, some individuals show signs of instability. By linking experimental measures to administrative tax records, we showthat identified instability is uncorrelated with both levels and changes in sociodemographic variables.", "doi": "10.1162/rest_a_00433", "issn": "0034-6535", "publisher": "MIT Press", "publication": "Review of Economics and Statistics", "publication_date": "2015-05", "series_number": "2", "volume": "97", "issue": "2", "pages": "273-286" }, { "id": "authors:j28a8-gav71", "collection": "authors", "collection_id": "j28a8-gav71", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200722-142855007", "type": "article", "title": "Judging Experimental Evidence on Dynamic Inconsistency", "author": [ { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "This article briefly summarizes and judges recent experimental developments exploring the predictions of dynamically inconsistent models. An opinion is provided as to how the literature may evolve given these recent advances.", "doi": "10.1257/aer.p20151086", "issn": "0002-8282", "publisher": "American Economic Association", "publication": "American Economic Review", "publication_date": "2015-05", "series_number": "5", "volume": "105", "issue": "5", "pages": "280-285" }, { "id": "authors:qxc34-7rx30", "collection": "authors", "collection_id": "qxc34-7rx30", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200722-150215296", "type": "publication_workingpaper", "title": "Randomizing Endowments: An Experimental Study of Rational Expectations and Reference-Dependent Preferences", "author": [ { "family_name": "Goette", "given_name": "Lorenz", "clpid": "Goette-L" }, { "family_name": "Harms", "given_name": "Annette", "clpid": "Cerulli-Harms-A" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "An important advance in the study of reference-dependent preferences is the discipline provided by coherent accounts of reference point formation. K\u0151szegi and Rabin (2006) provide such discipline by positing a reference point grounded in rational expectations. We examine the predictions of K\u0151szegi and Rabin (2006) in the context of market experiments with probabilistic forced exchange. The experiment tightly tests the predictions of K\u0151szegi and Rabin (2006), as when the probability of forced exchange increases, individuals should grow more willing to exchange. This mechanism has the theoretical potential to eliminate and even reverse the 'endowment effect' (Knetsch and Sinden, 1984; Knetsch, 1989; Kahneman et al., 1990). Our results uniformly reject these theoretical predictions. In a series of experiments with a total of 930 subjects, sellers' valuations exceed buyers' valuations under all probabilities of forced exchange. In robustness tests where attention is drawn specifically to the forced exchange mechanism, the results are directionally more promising for buyers, but still reject the main thrust of the theoretical predictions. Our findings suggest a potential path forward incorporating failures to completely forecast sensations of gain and loss into models of expectations-based reference dependence.", "publisher": "Caltech Library", "publication_date": "2014-11" }, { "id": "authors:reakk-qq813", "collection": "authors", "collection_id": "reakk-qq813", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200722-143819362", "type": "article", "title": "Violence and Risk Preference: Experimental Evidence from Afghanistan", "author": [ { "family_name": "Callen", "given_name": "Michael", "clpid": "Callen-M" }, { "family_name": "Isaqzadeh", "given_name": "Mohammad", "clpid": "Isaqzadeh-M" }, { "family_name": "Long", "given_name": "James D.", "clpid": "Long-J-D" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "We investigate the relationship between violence and economic risk preferences in Afghanistan combining: (i) a two-part experimental procedure identifying risk preferences, violations of Expected Utility, and specific preferences for certainty; (ii) controlled recollection of fear based on established methods from psychology; and (iii) administrative violence data from precisely geocoded military records. We document a specific preference for certainty in violation of Expected Utility. The preference for certainty, which we term a Certainty Premium, is exacerbated by the combination of violent exposure and controlled fearful recollections. The results have implications for risk taking and are potentially actionable for policymakers and marketers.", "doi": "10.1257/aer.104.1.123", "issn": "0002-8282", "publisher": "American Economic Association", "publication": "American Economic Review", "publication_date": "2014-01", "series_number": "1", "volume": "104", "issue": "1", "pages": "123-148" }, { "id": "authors:w2qd2-gy117", "collection": "authors", "collection_id": "w2qd2-gy117", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200721-133841705", "type": "article", "title": "Discounting financial literacy: Time preferences and participation in financial education programs", "author": [ { "family_name": "Meier", "given_name": "Stephan", "clpid": "Meier-S" }, { "family_name": "Sprenger", "given_name": "Charles D.", "clpid": "Sprenger-C-D" } ], "abstract": "Many policymakers and economists argue that financial literacy is key to financial well-being. But why do many individuals remain financially illiterate despite the benefits of being financially informed?\n\nThis paper presents results from a field study linking individual decisions to acquire financial information to a normally unobservable characteristic: time preferences. We elicited time preferences using incentivized choice experiments for all individuals to whom a financial education program was offered. Our results show that individuals who choose to acquire personal financial information have substantially higher discount factors than individuals who do not. The results can be interpreted as non-participants discount the benefits of being financially literate more.", "doi": "10.1016/j.jebo.2012.02.024", "issn": "0167-2681", "publisher": "Elsevier", "publication": "Journal of Economic Behavior & Organization", "publication_date": "2013-11", "volume": "95", "pages": "159-174" }, { "id": "authors:nybp9-hp386", "collection": "authors", "collection_id": "nybp9-hp386", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200722-145634839", "type": "article", "title": "Risk Preferences Are Not Time Preferences", "author": [ { "family_name": "Andreoni", "given_name": "James", "clpid": "Andreoni-J" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "Risk and time are intertwined. The present is known while the future is inherently risky. This is problematic when studying time preferences since uncontrolled risk can generate apparently present-biased behavior. We systematically manipulate risk in an intertemporal choice experiment. Discounted expected utility performs well with risk, but when certainty is added common ratio predictions fail sharply. The data cannot be explained by prospect theory, hyperbolic discounting, or preferences for resolution of uncertainty, but seem consistent with a direct preference for certainty. The data suggest strongly a difference between risk and time preferences.", "doi": "10.1257/aer.102.7.3357", "issn": "0002-8282", "publisher": "American Economic Association", "publication": "American Economic Review", "publication_date": "2012-12", "series_number": "7", "volume": "102", "issue": "7", "pages": "3357-3376" }, { "id": "authors:mvabq-h8p63", "collection": "authors", "collection_id": "mvabq-h8p63", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200724-132913042", "type": "article", "title": "Estimating Time Preferences from Convex Budgets", "author": [ { "family_name": "Andreoni", "given_name": "James", "clpid": "Andreoni-J" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "Experimentally elicited discount rates are frequently higher than what seems reasonable for economic decision-making. Such high rates are often attributed to present-biased discounting. A well-known bias of standard measurements is the assumption of linear consumption utility. Attempting to correct this bias using measures of risk aversion to identify concavity, researchers find reasonable discounting but at the cost of exceptionally high utility function curvature. We present a new methodology for identifying time preferences, both discounting and curvature, from simple allocation decisions. We find reasonable levels of both discounting and curvature and, surprisingly, dynamically consistent time preferences.", "doi": "10.1257/aer.102.7.3333", "issn": "0002-8282", "publisher": "American Economic Association", "publication": "American Economic Review", "publication_date": "2012-12", "series_number": "7", "volume": "102", "issue": "7", "pages": "3333-3356" }, { "id": "authors:gzgaq-zw608", "collection": "authors", "collection_id": "gzgaq-zw608", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200721-141401183", "type": "article", "title": "Time Discounting Predicts Creditworthiness", "author": [ { "family_name": "Meier", "given_name": "Stephan", "clpid": "Meier-S" }, { "family_name": "Sprenger", "given_name": "Charles D.", "clpid": "Sprenger-C-D" } ], "abstract": "In the recent subprime crisis, many individuals defaulted on their loans. Though the institutional sources of defaulting and delinquencies were much debated in the aftermath of the crisis, much less attention was given to individual differences in defaulting behavior. How do individuals decide whether to repay borrowed money? The decision to default can be viewed as an intertemporal choice, as defaulting provides monetary benefits in the near future and costs in the more distant future (Chatterjee, Corbae, Nakajima, & Rios-Rull, 2007; Fehr, 2002). Therefore, interpersonal differences in time discounting may influence defaulting. Psychological research shows substantial heterogeneity in time discounting and often large degrees of time discounting, especially if immediate rewards are available (e.g., Frederick, Loewenstein, & O'Donoghue, 2002; Kirby & Herrnstein, 1995). Measured time discounting is predictive of life outcomes such as scholastic achievement and health-related behavior (Chabris, Laibson, Morris, Schuldt, & Taubinsky, 2008; Chapman, 1996; Eigsti et al., 2006; Kirby, Petry, & Bickel, 1999; Mischel, Shoda, & Rodriguez, 1989).\n\nIn this report, we document that the degree of time discounting predicts repayment as measured using the standard U.S. metric of creditworthiness, an individual's Fair Isaac Corporation (FICO) credit score. The component of time discounting previously found to be associated with deliberate decision making (Figner et al., 2010; McClure, Laibson, Loewenstein, & Cohen, 2004) is more predictive of creditworthiness than is the immediacy-bias component associated with affective or impulsive decision making. The findings indicate that time discounting predicts creditworthiness and that repayment decisions may be associated with deliberative, rather than affective, processes.", "doi": "10.1177/0956797611425931", "issn": "0956-7976", "publisher": "SAGE Publications", "publication": "Psychological Science", "publication_date": "2012-01", "series_number": "1", "volume": "23", "issue": "1", "pages": "56-58" }, { "id": "authors:wp3w3-wfn47", "collection": "authors", "collection_id": "wp3w3-wfn47", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200724-130354958", "type": "article", "title": "Individuals and Identity in Economics by John B. Davis [Book Review]", "author": [ { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "The book, Individuals and Identity in Economics, by John Davis is the follow-up to Davis's previous work, The Theory of the Individual in Economics on the critical role and definition of the individual in economic thought. Beyond analyzing a conception of the individual as a collection of preferences, Davis seeks to resolve notions of atomistic, self-contained individuals with both post-World War II game theory and modem behavioral economics. The result is a well-developed, carefully constructed treatment giving food for thought for those interested in the philosophy of economics and the conception of the individual.", "doi": "10.1017/CBO9780511782237", "issn": "0022-0515", "publisher": "American Economic Association", "publication": "Journal of Economic Literature", "publication_date": "2011-12", "series_number": "4", "volume": "49", "issue": "4", "pages": "1250-1251" }, { "id": "authors:e7gkg-zbp64", "collection": "authors", "collection_id": "e7gkg-zbp64", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200721-150526905", "type": "article", "title": "Present-Biased Preferences and Credit Card Borrowing", "author": [ { "family_name": "Meier", "given_name": "Stephan", "clpid": "Meier-S" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "Some individuals borrow extensively on their credit cards. This paper tests whether present-biased time preferences correlate with credit card borrowing. In a field study, we elicit individual time preferences with incentivized choice experiments, and match resulting time preference measures to individual credit reports and annual tax returns. The results indicate that present-biased individuals are more likely to have credit card debt, and to have significantly higher amounts of credit card debt, controlling for disposable income, other socio-demographics, and credit constraints.", "doi": "10.1257/app.2.1.193", "issn": "1945-7782", "publisher": "American Economic Association", "publication": "American Economic Journal: Applied Economics", "publication_date": "2010-01", "series_number": "1", "volume": "2", "issue": "1", "pages": "193-210" }, { "id": "authors:q0esz-3e044", "collection": "authors", "collection_id": "q0esz-3e044", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200722-143437938", "type": "publication_workingpaper", "title": "Credit Card Debt and Payment Use", "author": [ { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" }, { "family_name": "Stavins", "given_name": "Joanna", "clpid": "Stavins-J" } ], "abstract": "Approximately half of credit card holders in the United States regularly carry unpaid credit card debt. These so-called \"revolvers\" exhibit payment behavior that differs from that of those who repay their entire credit card balance every month. Previous literature has focused on the adoption of debit cards by people who carry credit card balances, but so far there has been no empirical analysis exploring the relationship between revolving behavior and patterns of payment use, such as substitution away from credit cards to other payment methods. \n\nUsing data collected in the 2005 Survey of Consumer Payment Preferences, we explore the relationship between revolving credit card balances and payment use. We find that credit card revolvers are significantly more likely to use debit and less likely to use credit than convenience users who repay their balances each month. There is no significant difference between these two types of credit card users in their use of check or cash. The two groups differ in their perceptions of payments as well as in their payment behavior: revolvers are significantly less likely to view debit as superior with respect to ease of use and acceptability, but more likely to see debit as superior with respect to control over money and budgeting.", "doi": "10.2139/ssrn.1139134", "publication_date": "2008-05" } ]