Decision Making When Things Are Only a Matter of Time

• 成果类型: Article
• 署名作者: Ebert, Sebastian
• 署名单位: Frankfurt School Finance & Management; Tilburg University
• 刊物名称: OPERATIONS RESEARCH
• ISSN/ISSBN: 0030-364X
• DOI: 10.1287/opre.2019.1923
• 发表日期: 2020
• 页码: 1564-1575
• 关键词: risk; prudence; aversion; CHOICE

摘要

This article gives a comprehensive treatment of preferences regarding time risk-the risk of something happening sooner or later-within the expected discounted utility model. We characterize the signs of the discount function's derivatives of all orders and show how these signs are decisive for time risk preferences. We introduce the notions of prudent and temperate discounting and illustrate their importance for economic behavior. Several applications in which an important event is only a matter of time are presented. The seminal net present value rule to evaluate investment opportunities is generalized to take into account the timing uncertainty of cash flows.