Are Risk Preferences Stable
Bibliographic Data
| ID | 4804482 |
|---|---|
| Authors | Hannah Schildberg-Hörisch (0000-0002-4567-1946, Hannah Schildberg-Hörisch is Professor of Applied Microeconomics, Heinrich-Heine-University Düsseldorf, Germany. Her email address is, corresponding author) |
| Year | 2018 |
| Volume | 32 |
| Issue | 2 |
| Pages | 135-154 |
| Publication date | 2018-05-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Journal of Economic Perspectives (JOURNAL) |
| Journal identifiers | ISSN: 0895-3309 • E-ISSN: 1944-7965 |
| Publisher | American Economic Association (PUBLISHER • US) |
| DOI | 10.1257/jep.32.2.135 |
| PMID | 30203933 |
| OpenAlex | W2801131148 |
| Language | EN |
| Citations received | 83 |
| References cited | 78 |
It is ultimately an empirical question whether risk preferences are stable over time. The evidence comes from diverse strands of literature, covering the stability of risk preferences in panel data over shorter periods of time, life-cycle dynamics in risk preferences, the possibly long-lasting effects of exogenous shocks on risk preferences as well as temporary variations in risk preferences. Individual risk preferences appear to be persistent and moderately stable over time, but their degree of stability is too low to be reconciled with the assumption of perfect stability in neoclassical economic theory. We offer an alternative conceptual framework for preference stability that builds on research regarding the stability of personality traits in psychology. The definition of stability used in psychology implies high levels of rank-order stability across individuals and not that the individual will maintain the same level of a trait over time. Preference parameters are considered as distributions with a mean that is significantly but less than perfectly stable, plus some systematic variance. This framework accommodates evidence on systematic changes in risk preferences over the life cycle, due to exogenous shocks such as economic crises or natural catastrophes, and due to temporary changes in self-control resources, emotions, or stress. We note that research on the stability of (risk) preferences is conceptually at the heart of microeconomics and systematic changes in risk preferences have vital real-world consequences
Econometrics · Economics · Expected utility hypothesis · Financial economics · Microeconomics · Personality · Preference · Risk-seeking · Systematic risk · Time preference · Trait · Computer Science · Decision-Making and Behavioral Economics · Experimental Behavioral Economics Studies · Mathematics · Psychological Well-being and Life Satisfaction · Psychology · Social Psychology
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| Unique citing works | 83 |
|---|---|
| Citations per year | 9,22 |
| Citation span | 2017 - 2026 (10) |
| Citation velocity | current |
| Highly cited | No |
| Citation types | Neutral: 78 |