American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Evolution of Time Preferences and Attitudes toward Risk
American Economic Review
vol. 99,
no. 3, June 2009
(pp. 937–55)
Abstract
This paper explores a general model of the evolution and adaption of hedonic utility. It is shown that optimal utility will be increasing strongly in regions where choices have to be made often and decision mistakes have a severe impact on fitness. Several applications are suggested. In the context of intertemporal preferences, the model offers an evolutionary explanation for the existence of conflicting short- and long-run interests that lead to dynamic inconsistency. Concerning attitudes toward risk, an evolutionary explanation is given for S-shaped value functions that adjust to the decision maker's environment. (JEL D81, D83)Citation
Netzer, Nick. 2009. "Evolution of Time Preferences and Attitudes toward Risk." American Economic Review, 99 (3): 937–55. DOI: 10.1257/aer.99.3.937JEL Classification
- D81 Criteria for Decision-Making under Risk and Uncertainty
- D83 Search; Learning; Information and Knowledge; Communication; Belief