| Titre : | Probability and time trade-off (2012) |
| Auteurs : | Manel Baucells, Auteur ; Franz H. Heukamp, Auteur |
| Type de document : | Article : texte imprimé |
| Dans : | Management science (Vol. 58 N° 4, Avril 2012) |
| Article en page(s) : | pp. 831-842 |
| Note générale : | Management |
| Langues : | Anglais |
| Tags : | Risk preferences Time Probability discount rate Subendurance Magnitude effect Psychological distance |
| Résumé : | Probability and time are integral dimensions of virtually any decision. To treat them together, we consider the prospect of receiving outcome x with a probability p at time t. We define risk and time distance, and show that if these two distances are traded off linearly, then preferences are characterized by three functions: a value function, a probability discount rate function, and a psychological distance function. The concavity of the psychological distance function explains the common ratio and common difference effects. A decreasing probability discount rate accounts for the magnitude effect. The discount rate and the risk premium depend on the shape of these three functions. |
| DEWEY : | 658 |
| ISSN : | 0025-1909 |
| En ligne : | http://mansci.journal.informs.org/content/58/4/831.abstract |
