A value function that explains the magnitude and sign effects
AbstractLoewenstein and Prelec (1992) explain the 'magnitude effect' and the 'sign effect', respectively, by using increasing elasticity of the value function and a higher elasticity for losses as compared to gains. We provide a value function with these two properties.
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Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 105 (2009)
Issue (Month): 3 (December)
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Web page: http://www.elsevier.com/locate/ecolet
Anomalies of the exponentially discounted utility model The magnitude effect The sign effect SIE value functions;
Other versions of this item:
- Ali al-Nowaihi & Sanjit Dhami, 2008. "A value function that explains the magnitude and sign effects," Discussion Papers in Economics 08/31, Department of Economics, University of Leicester.
- C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
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