Does the way people earn money affect their economic decisions? The main contribution of this thesis is to provide new evidence that the way people earn money affects their decision-making. Standard economic theory generally assumes that money is fungible – that is, each unit of money is a perfect substitute for another. Fungibility thus predicts that source of income should have no influence on individual decision-making. On the other hand, Prospect theory determines the value of same prospect as gain or loss relative to the reference point. Prospect theory predicts a significant source of income on individual decision-making if source of income shifts the reference point. This thesis has focused on investigating whether source of income affects (a) individual risk-preference, which governs individual decision-making under risk; and (b) individual time-preference, which governs individual intertemporal decision-making. From a series of real-effort laboratory experiments, I find that subjects are more risk-averse and more patient concerning hard-earned money than with easily earned money consistent with Prospect theory and loss aversion.
| Identifer | oai:union.ndltd.org:bl.uk/oai:ethos.bl.uk:648914 |
| Date | January 2015 |
| Creators | Lee, Jae Ho |
| Publisher | University of Aberdeen |
| Source Sets | Ethos UK |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
| Source | http://digitool.abdn.ac.uk:80/webclient/DeliveryManager?pid=225793 |
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