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The heterogeneity of time–risk tradeoffs

✍ Scribed by Harrell Chesson; W. Kip Viscusi

Book ID
101280028
Publisher
John Wiley and Sons
Year
2000
Tongue
English
Weight
115 KB
Volume
13
Category
Article
ISSN
0894-3257

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✦ Synopsis

This paper uses an original sample of 146 business managers to examine the rationality of choices with respect to deferred lotteries. Using a new empirical methodology, it explicitly estimates implicit rates of time preference with respect to these deferred gambles. The estimated discount rate decreases with the time horizon of the gamble, which is consistent with violations observed in discounted utility contexts. Cigarette smokers exhibit lower estimated discount rates in this context, which is contrary to many popular hypotheses about the economic causes of smoking behavior.

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## Abstract Qualitative survey studies and a recent quantitative study by Callen et al. (2000) indicate that JIT manufacturing is more profitable than conventional non‐JIT manufacturing. This study tests the hypothesis that the excess profitability of JIT manufacturing just compensates for the addi