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Commonalities in time and ambiguity aversion for long-term risks.
Theory and Decision 2003; 54:57-71.
Chesson HW, Viscusi WK.
Abstract
Optimal protective responses to long-term risks depend on rational perceptions
of ambiguous risks and uncertain time horizons. Our study examined the joint
influence of uncertain delay and risk in an original sample of business owners
and managers. We found that many subjects disliked uncertainty in the timing
of an outcome, a reaction we term ``lottery timing risk aversion.'' Such
aversion to uncertain timing was positively related to aversion to ambiguous
probabilities for lotteries involving storm damage risks. This association
suggests that uncertainty may be processed similarly in both the risk and
time dimensions.