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Tilburg University Risk, Time and Social Preferences Perez Padilla, Mitzi

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Tilburg University Risk, Time and Social Preferences Perez Padilla, Mitzi Tilburg University Risk, time and social preferences Perez Padilla, Mitzi Publication date: 2017 Document Version Publisher's PDF, also known as Version of record Link to publication in Tilburg University Research Portal Citation for published version (APA): Perez Padilla, M. (2017). Risk, time and social preferences: Evidence from large scale experiments. CentER, Center for Economic Research. 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Download date: 30. sep. 2021 RISK, TIME AND SOCIAL PREFERENCES: EVIDENCE FROM LARGE SCALE EXPERIMENTS RISK, TIME AND SOCIAL PREFERENCES: EVIDENCE FROM LARGE SCALE EXPERIMENTS PROEFSCHRIFT Proefschrift ter verkrijging van de graad van doctor aan Tilburg University op gezag van de rector magnificus, prof.dr. E.H.L. Aarts, in het openbaar te verdedigen ten overstaan van een door het college voor promoties aangewezen commissie in de aula van de Universiteit op vrijdag 27 oktober 2017 om 10.00 uur door MITZI PÉREZ PADILLA geboren te Mexico City, Mexico. PROMOTOR: Prof.dr. A.H.O. van Soest COPROMOTOR: Dr. S. Suetens PROMOTIECOMMISSIE: Prof.dr. J.W.M. Das Prof.dr. J.J.M. Potters Prof.dr. H.M. Von Gaudecker Prof.dr. P. Moffatt j i Acknowledgements First I would like to thank the financial support of the NWO Top grant that made my research and this manuscript possible. I am very grateful for this opportunity and for their support throughout the last five years. I was able to attend multiple conferences in the Netherlands and internationally which facilitated the discussion and exchange of ideas that contributed to my research. I would like to express my gratitude to the members of the committee Jan Potters, Hans Martin von Gaudecker, Peter Moffatt and Marcel Das for agreeing to read my manuscript and attend my defense. Your comments and insights previous to the final version of this thesis were very valuable to me. I want to specially thank my supervisor Arthur van Soest for his great guidance during the past few years. When I started my Research Master thesis with Arthur, he was open about my ideas on using Mexican data and he guided me with great enthusiasm. Later, during the PhD, there was a lot to learn about structural econometrics and Arthur was always available and willing to look at my code and help me spot the errors. I appreciate deeply the patience and the time he dedicated to me as a student and to our research together. I also am very grateful to Sigrid Suetens for accepting to be my co-supervisor even though my research was not exactly aligned with her main interests (but I was very interested in hers). During the process of writing the last chapter of my thesis I learned a lot; from the writing style to the intuition behind our results. Thank you as well for the opportunity to go to the PhD course in Bergen. I am also grateful to other researchers from the Econometrics and Economics departments. Elena Cettolin for being a great coauthor and for sharing her expertise with me, Charles Nous- sair for brainstorming with me, Tunga Kantarci, Martin Salm, Tobias Klein, Jochem de Bresser, Boris van Leeuwen for our discussions in the train, Jan Potters, Eline van der Heijden, and all the participants of seminars who contributed with interesting questions and feedback. Also, Korine Bor, the graduate office and the secretariat of Econometrics for always being a great support. Next, I want to thank the people with whom I shared an office with. I am very thankful for the time we spent together. Niels, although very serious at first, we became good friends, discussing work and life. I also shared an office with Hong Li and Elisabeth Beusch. Thank you for not setting the heater too low or the airco too high, and of course, for being so much fun to be around. Bas, thank you for being our adoptive office-mate and the nice discussions. Life as a PhD would not be complete if we did not share our struggles during lunch and outside the K building, so I would like to thank the "lunch group" (Hettie, Aida, Nick, Maria, Mario, Alaa, Renata, Marieke, Trevor and Marleen). I also had a really good time at our running events, like the Hart van Brabantloop and the Tilburg Ten Miles. Rox and Cata, my amazing roommates, thank you for being there during these years. We shared our experiences from the PhD but most of all we shared a nice home, adventures, trips, parties and lots of learning together. This experience would have not been the same without you. Paul and Sandra, thank you for making me feel at home, far away from home with your warmth and caring. Ina, thank you for helping me push Rox and each other to the gym and for sharing your love for dancing salsa. Aida and Chelo, the tutu club. Denise and Indyra, my Bolivian and Venezuelan sisters, thank you for being there for me. Also part of the "latin group" Noelia, Maria José and Patricio. Also, I am very glad to have met the "psychology group", Byron, Lis, Willem, Michele and Gaby. People who have always been with me in the distance deserve special thanks, for emailing, skype sessions and long chats. Yuri, thanks for your sincerity always. Ale Ávalos, my dear itamita, thank you for visiting me and for always being close. Camila, Carolina, Fio, Marisol, Irais, Yazu, Christian, Victor and all my friends in Mexico who thought I would come back "soon". I am eternally thankful to my parents and brother for being there for me. For understanding and supporting me throughout these years. Mamá, Papá e Iván, no lo pude haber hecho sin ustedes, gracias! Thanks to my grandparents and Javier, Claudita, Tara, Fer, Tere, Bicho and the rest of my family. I am also thankful for my Dutch family with whom I shared a lot in the past three years. Finally, I want to thank Hein-Carl, my husband, for all the love and support he has given me, for believing in me and for making it always so much better. j iii Contents Acknowledgements i 1 Introduction 1 2 Economic preferences and personality traits on portfolio choice outcomes 7 2.1 Introduction 7 2.2 Experiment and individual preferences 11 2.3 The data 18 2.4 Results 23 2.5 Summary and conclusion 31 3 Risk and Time Preferences and Financial Decisions of Couples 41 3.1 Introduction 41 3.2 Related literature 42 3.2.1 Risk attitudes and time preference 43 3.2.2 Household decision making 45 3.3 The Experiment and Individual Parameters 46 3.4 Data 49 3.5 Results 54 3.5.1 Correlation between spouses 54 3.5.2 Household financial wealth and portfolio choice 56 3.6 Summary and conclusion 64 4 Stability of Risk and Time Preferences of Individuals and Couples 77 4.1 Introduction 77 4.2 Related literature 79 4.3 Experimental setup and data description 81 4.3.1 The experiment 81 4.3.2 Structural parameters of risk, error and time preference 82 4.3.3 The data 85 4.4 Results 88 4.4.1 Stability of preferences 88 4.4.2 Stability of preferences and individual shocks 92 4.4.3 Stability of preferences and couple related externalities 94 4.5 Summary and Conclusions 97 5 Does having a higher socioeconomic status pay off in reciprocal relations? 107 5.1 Introduction 107 5.2 The trust game and SES: The data 109 5.3 Results 115 5.4 Summary and conclusion 122 5.4.1 Tables and Figures 132 j v List of Figures 2.1 Screen shot example of one choice 13 2.2 Dominated choices 20 2.3 Stated preferences 21 2.4 Financial wealth 28 2.5 Screen example 36 3.1 Choice example 47 3.2 Distribution of individual specific parameters 53 3.3 Histogram of women’s bargaining weights 59 3.4 Screen shot example 67 4.1 Histograms 85 4.2 Differences in decisions 89 4.3 Difference wave 1 - wave 2 91 5.1 Decision tree 110 5.2 Distribution of perceived SES ratings 114 5.3 Instructions I 127 5.4 Instructions II 128 5.5 Instructions II 128 5.6 SES and names 132 5.7 SES by age categories 133 j vii List of Tables 2.1 Summary statistics 18 2.2 Summary Statistics of Choices 19 2.3 Estimates of Risk and Time Preferences with Exponential Utility 22 2.4 Example Subjects: 4, 5, 100, 2500 23 2.5 Pearson’s correlations between traits and preferences 24 2.6 OLS regressions on Economic preferences 26 2.7 Preferences, traits and financial outcomes of decision makers 29 2.8 Stated preferences, personality traits and financial outcomes 30 2.9 Details of the experimental design 37 2.10 Dominated options and demographics 38 2.11 Preferences, traits and financial outcomes of decision makers 39 2.12 Preferences, traits and financial outcomes 40 3.1 Summary statistics 52 3.2 Individual Specific Parameters 54 3.3 Correlations between spouses 54 3.4 Determinants of weights 60 3.5 Probit estimations of household investments in risky assets 61 3.6 Tobit estimations of household financial wealth 63 3.7 Details of the experimental design 68 3.8 Summary Statistics of Choices 69 3.9 SUR regressions of individual attitudes 70 3.10 Bivariate ordered probit of stated preferences 71 3.11 Correlation
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