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A reconciliation of time preference elicitation methods

Drichoutis, Andreas and Nayga, Rodolfo (2013): A reconciliation of time preference elicitation methods.

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Abstract

We reconcile �findings from the Multiple Price List method (Andersen et al., 2008) and the Convex Time Budget method (Andreoni and Sprenger, 2012a) that seem to have generated a heated debate in the time preference literature. Specifi�cally, we discuss the claims of Andreoni and Sprenger (2012b) that "risk preferences are not time preferences" and assert that this may have been premature given that subsequent fi�ndings from replication and extension studies refute their basic conjecture while another study off�ers an alternative explanation for their results (Andersen et al., 2011a). Although the CTB seems to perform better than the MPL method in terms of predictive validity, we also discuss recent econometric issues that question the validity of claims resulting from analysis of CTB data. We also raise an issue with non-EUT explanations of Andreoni and Sprenger's (2012b) results, since the payment mechanism is not incentive compatible if the isolation assumption is not invoked.

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