Back to the St. Petersburg Paradox?
AbstractConventional parameterizations of cumulative prospect theory do not explain the St. Petersburg paradox. To do so, the power coefficient of an individual's utility function must be lower than the power coefficient of an individual's probability weighting function.
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Bibliographic InfoPaper provided by The Center for Economic Research and Graduate Education - Economic Institute, Prague in its series CERGE-EI Working Papers with number wp227.
Date of creation: Jul 2004
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EUT; Cumulative prospect theory; St. Petersburg paradox; Power utility; Probability ; Weighting.;
Find related papers by JEL classification:
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
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"Choice-Based Elicitation and Decomposition of Decision Weights for Gains and Losses Under Uncertainty,"
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