Are Risk Preferences Time-Dependent? Looking Ahead, a Group Has a Stronger Effect Than the Average of Its Individual Members

We investigate whether individual and group risk preferences are dependent on reward delay. To do so, we run a lottery-choice experiment, where payments are made either directly or in 3, 9, or 18 months after the experiment. We find that risk preference is time-dependent for both individuals and groups. In the present, groups make more risk-averse decisions than individuals do. As soon as decisions materialize in the future, this relation reverses, with groups becoming less risk-averse in their decisions and reaching almost risk neutrality at 18 months. Both, individuals and groups, do not significantly differ in their risk preferences between the different delays. We present a parameterization of the probability time trade-off model extended by the probability of prospect survival and show that our results are consistent with the affect-based reasoning explanation