By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.
Eliciting Time Preferences When Income and Consumption Vary: Theory, Validation & Application to Job Search
Eliciting Time Preferences When Income and Consumption Vary: Theory, Validation & Application to Job Search
Michèle Belot
Philipp Kircher
Paul Muller
American Economic Journal: Microeconomics (Forthcoming)
Abstract
We propose a simple method for eliciting individual time preferences without estimating
utility functions even in settings where background consumption changes over time. It relies
on eliciting preferences for receiving high stakes lottery tickets at different points in time. In
a standard intertemporal choice model high rewards decouple lottery choices from variation
in background consumption. We investigate robustness to other assumptions theoretically,
and validate our elicitation method experimentally. We illustrate an application of our
method with unemployed job seekers which naturally have income/consumption variation.
