Temporal Risk and the Nature of Induced Preferences *

@inproceedings{Machina2003TemporalRA,
  title={Temporal Risk and the Nature of Induced Preferences *},
  author={Mark J. Machina},
  year={2003}
}
It has been known since the work of H. Markowitz (“Portfolio Selection: Efftcient Diversification of Investments,” Yale Univ. Press, 1959) and J. Mossin (Amer. Econ. Rev. 59 (1969), 172-174) that even an individual whose underlying preferences satisfy the von Neumann-Morgenstern axioms will not choose over delayed (i.e., “temporal”) risky prospects in a manner which can be modelled as expected utility maximizing. Since most economically important instances of risk taking (insurance, real… CONTINUE READING

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