TY - JOUR
TI - Extending the entanglement of risk and time
DO - https://doi.org/doi:10.7282/T35H7K5R
PY - 2017
AB - While many real world decisions involve both risk and delay, relatively little research has investigated the nuanced ways in which they interact. Moreover, those studies which have studied their interaction almost unanimously regard risk as binary – a 50% chance of $100 in four weeks and a 50% chance of $0 – what I term outcome risk. The general finding from these studies is that the combination of risk and time preferences is not a simple combination of each in isolation. This suggests that delay is entangled with risk. In this study, in addition to binary risk, I investigate how risk with multiple outcomes – amount risk – and risk with multiple outcomes and a chance receiving nothing – amount and outcome risk – both affect discounting. To derive predictions for amount and amount and outcome risk, I compare simulated data from a model which presumes that time and risk are entangled to a model which presumes risk and delay are independent. These predictions are tested in two studies and a within paper meta-analysis. As predicted by the simulations, both outcome and amount risk effect discounting and their effects are more pronounced when the delay to one of the options is in the present. Further, the effect of outcome risk is attenuated in the presence of amount risk. Taken together, these results show that a nuanced view of risk is required when investigating its interaction with delay.
KW - Psychology
KW - Decision making
KW - Delay discounting (Psychology)
KW - Risk
LA - eng
ER -