2010), Preferences for One-Shot Resolution of Uncertainty and Allais-Type Behavior. Econometrica, forthcoming

Experimental evidence suggests that individuals are more risk averse when they per-ceive risk gradually. We address these \u85ndings by studying a decision maker (DM) who has recursive preferences over compound lotteries and who cares about the way uncer-tainty is resolved over time. DM has preferences for one-shot resolution of uncertainty if he always prefers any compound lottery to be resolved in a single stage. We establish an equivalence between dynamic preferences for one-shot resolution of uncertainty and static preferences that are identi\u85ed with the behavior observed in Allais-type exper-iments. The implications of this equivalence on preferences over information systems are examined. We de\u85ne the gradual resolution premium and demonstrate its magni-fying e¤ect when combined with the usual risk premium. In an intertemporal context, preferences for one-shot resolution of uncertainty capture narrow framing. 1