TY - JOUR
T1 - Does time inconsistency differ between gain and loss? An intra-personal comparison using a non-parametric elicitation method
AU - Shiba, Shotaro
AU - Shimizu, Kazumi
N1 - Funding Information:
This study was funded by the Waseda University Grant for Special Research Projects [Project number: 2016A-001] and JSPS KAKENHI [Grant number: 18J11832].
Publisher Copyright:
© 2019, The Author(s).
PY - 2020/4/1
Y1 - 2020/4/1
N2 - Several studies on time preference have found time inconsistency in both gain and loss preferences. However, the relationship between the two within the same person remains unclear; that is, does an individual who demonstrates time inconsistency for gain outcomes do so for losses as well? This paper reports on individuals’ time inconsistency for gains and losses in a laboratory setting. To obtain a precise comparison of individuals’ time inconsistency for gains and losses, we used Rohde’s “DI (decreasing impatience)-index” (Manag Sci 65(4):1700–1716, 2018) and measured the level of time inconsistency, rather than merely identifying whether TI was present. This index represents how strongly a person exhibits present bias, and easily extends to the comparison between gain and loss preferences within the same person. Further, it allows the experiment to test for so-called future bias, which has been a focus area in recent time inconsistency literature. It is elicited through a non-parametric method, which avoids any specification errors in the analysis. Our findings are as follows: first, we found future bias in preferences for not only gains but also losses, and we confirmed that this tendency is consistent with previous findings on preferences for gains. Second, a positive correlation between time inconsistency for gains and losses was found at the individual level. Indeed, we could not find a significant difference between the two in most cases.
AB - Several studies on time preference have found time inconsistency in both gain and loss preferences. However, the relationship between the two within the same person remains unclear; that is, does an individual who demonstrates time inconsistency for gain outcomes do so for losses as well? This paper reports on individuals’ time inconsistency for gains and losses in a laboratory setting. To obtain a precise comparison of individuals’ time inconsistency for gains and losses, we used Rohde’s “DI (decreasing impatience)-index” (Manag Sci 65(4):1700–1716, 2018) and measured the level of time inconsistency, rather than merely identifying whether TI was present. This index represents how strongly a person exhibits present bias, and easily extends to the comparison between gain and loss preferences within the same person. Further, it allows the experiment to test for so-called future bias, which has been a focus area in recent time inconsistency literature. It is elicited through a non-parametric method, which avoids any specification errors in the analysis. Our findings are as follows: first, we found future bias in preferences for not only gains but also losses, and we confirmed that this tendency is consistent with previous findings on preferences for gains. Second, a positive correlation between time inconsistency for gains and losses was found at the individual level. Indeed, we could not find a significant difference between the two in most cases.
KW - Future bias
KW - Intra-personal comparison
KW - Sign effect
KW - Time inconsistency
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U2 - 10.1007/s11238-019-09728-1
DO - 10.1007/s11238-019-09728-1
M3 - Article
AN - SCOPUS:85074870731
VL - 88
SP - 431
EP - 452
JO - Theory and Decision
JF - Theory and Decision
SN - 0040-5833
IS - 3
ER -