Strotz meets Allais: Diminishing Impatience and the Certainty Effect: Reply and Corrigendum

Halevy (2008) establishes a relation between non-standard behaviors in the domains of risk and time. A decision maker who believes that only present consumption is certain while any future consumption is uncertain exhibits diminishing impatience if and only if her preferences on the risk domain are represented by a non-expected utility function. Contrary to previous claims (Halevy, 2008; Saito, 2011) we demonstrate that diminishing impatience does not necessarily imply the certainty effect. If diminishing impatience is invariant to the scale in which time is measured, then the severed connection between time and risk preferences can be re-established.