Publication
Sun, Chen and Jan Potters (2021), Magnitude Effect in Intertemporal Allocation Tasks, Experimental Economics, forthcoming.
Abstract: We investigate how the intertemporal allocation of monetary rewards is influenced by the size of the total budget, with a particular interest in the channels of influence. We find a significant magnitude effect: the budget share allocated to the later date increases with the size of the budget. This effect does not depend on whether the sooner reward is paid in the present or in the future, implying that the factors which drive the present bias cannot account for the magnitude effect. At the aggregate level as well as at the individual level, we find magnitude effects both on the discount rate and on intertemporal substitutability (i.e. utility curvature). The latter effect is consistent with theories in which the degree of asset integration is increasing in the stake.
[Paper] [Online Appendices] [Slides]
Abstract: We investigate how the intertemporal allocation of monetary rewards is influenced by the size of the total budget, with a particular interest in the channels of influence. We find a significant magnitude effect: the budget share allocated to the later date increases with the size of the budget. This effect does not depend on whether the sooner reward is paid in the present or in the future, implying that the factors which drive the present bias cannot account for the magnitude effect. At the aggregate level as well as at the individual level, we find magnitude effects both on the discount rate and on intertemporal substitutability (i.e. utility curvature). The latter effect is consistent with theories in which the degree of asset integration is increasing in the stake.
[Paper] [Online Appendices] [Slides]
Working Papers
Measuring Preference over Intertemporal Profiles. October 2021.
Abstract: We develop a simple method to measure intertemporal preferences in a parameter-free way. It requires weak assumptions on preferences to be measured, and hence can be applied to a wide range of models. It is easy to implement, clear to subjects, incentive compatible, and as efficient as existing methods if identical assumptions are imposed. In an experiment, we apply the method to monetary rewards. The measured preferences are consistent with earlier findings. In addition, the method allows us to document three new characteristics of preferences and to assess models that can hardly be distinguished using single dated outcomes.
[Paper] [Slides]
Does Making a Choice Affect Subsequent Belief Formation? An Experimental Study. June 2018.
Abstract: When uncertainty is present, choices are based on beliefs, but do choices in turn have an effect on subsequent belief formation? We perform an experiment to study choice-induced belief change in an individual decision-making context. After being presented with noisy signals about the values of two options, subjects are randomly assigned to one of the three treatments: making a choice between the two options, receiving a random option, or possessing no option. Then they are presented with more signals and are asked to estimate the values of the two options. We find no significant differences between the distributions of estimates in the three groups, irrespective of whether belief elicitation is incentivized or not, and irrespective of whether previous signals are perfectly accessible or not. This suggests that making a choice does not lead to an economically meaningful effect on subsequent belief formation in our setting.
[Paper] [Slides]
Abstract: We develop a simple method to measure intertemporal preferences in a parameter-free way. It requires weak assumptions on preferences to be measured, and hence can be applied to a wide range of models. It is easy to implement, clear to subjects, incentive compatible, and as efficient as existing methods if identical assumptions are imposed. In an experiment, we apply the method to monetary rewards. The measured preferences are consistent with earlier findings. In addition, the method allows us to document three new characteristics of preferences and to assess models that can hardly be distinguished using single dated outcomes.
[Paper] [Slides]
Does Making a Choice Affect Subsequent Belief Formation? An Experimental Study. June 2018.
Abstract: When uncertainty is present, choices are based on beliefs, but do choices in turn have an effect on subsequent belief formation? We perform an experiment to study choice-induced belief change in an individual decision-making context. After being presented with noisy signals about the values of two options, subjects are randomly assigned to one of the three treatments: making a choice between the two options, receiving a random option, or possessing no option. Then they are presented with more signals and are asked to estimate the values of the two options. We find no significant differences between the distributions of estimates in the three groups, irrespective of whether belief elicitation is incentivized or not, and irrespective of whether previous signals are perfectly accessible or not. This suggests that making a choice does not lead to an economically meaningful effect on subsequent belief formation in our setting.
[Paper] [Slides]
Work in progress
Do Experimental Measures of Time and Risk Preferences Predict Financial Outcomes? joint with Gijs van de Kuilen, Jan Potters, Arno Riedl, and Paul Smeets
Sub-Additive Expectations. joint with Peter Haan, Uwe Sunde, and Georg Weizsäcker
Sub-Additive Expectations. joint with Peter Haan, Uwe Sunde, and Georg Weizsäcker
