Abstract:
In Apesteguia and Ballester (2018), we show that the standard use of random utility models in the context of risk and time preferences may sharply violate a fundamental monotonicity property, and argue that their use in preference estimation may be problematic. We then establish that the alternative random parameter models are, in contrast, always monotone. We now present and study, theoretically, a simple framework for the joint treatment of risk and time preferences in deterministic settings. We then introduce a stochastic version of the model using the random multi-parameter approach, showing that is free of problems and ready to use in the estimation of risk and time preferences. We put into action the stochastic model using several existing experimental datasets.
Biography:
Miguel Ballester is an Associate Professor at the Department of Economics in the University of Oxford, and Lord Thomson of Fleet Fellow and Tutor in Economics at Balliol College. Before moving to Oxford, he was a Visiting Professor at the Department of Economics of New York University. He had been given a tenure position at Autònoma University of Barcelona in 2010, where he started his career after receiving the PhD in the Public University of Navarre in 2002.
Miguel Ballester is an economist interested in individual decision-making, with a special emphasis on its psychological foundations. Miguel uses theoretical techniques as well as some empirical and experimental tools to revolve around a better understanding of the relevant behavioural traits affecting individual decisions. Miguel has explored how to analyse possibly inconsistent individual decisions to better measure the rationality and welfare of individuals, work that has been published in the Journal of Political Economy. In recent projects, he has identified important misuses of standard applied techniques when estimating the levels of risk aversion or impatience of individuals and has proposed alternative methods free of these problems. These works have been published in the Journal of Political Economy and Econometrica.
Neuroeconomics Colloquium Series by the NYU-ECNU Institute of Brain and Cognitive Science at NYU Shanghai