A Study On Risk Preference In Intertemporal Choice

Standard economic theory assumes that individuals have preferences that are stable through time. Studies in psychopharmacology, neuroscience, and behavioral economics have revealed that humans and some animals discount the value of rewards as the delay in receipt increases (delay discounting) and as the receipt of a reward becomes less certain (probability discounting).Construal level theory proposes that temporal distance changes people's responses to future events by changing the way people mentally represent those events. The greater the temporal distance, the more likely are events to be represented in terms of a few abstract features that convey the perceived essence of the events (high-level construals) rather than in terms of more concrete and incidental details of the events (low-level construals). On the basis of Construal level Theory,study 1 confirmed that the feasibility of outcomes is more influential in the near future and that the desirability of outcomes is more influential in the distant future.study 2 confirmed that people take greater risks (i.e., favoring investments with a low probability of winning a high amount over those that offer a high probability to win a small amount) in decisions about temporally more distant investments.