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The expo-power value function as a candidate for the work-horse specification in parametric versions of cumulative prospect theory

  • Peel, D.A.
  • Zhang, Jie

The piecewise power value function proposed by Kahneman and Tversky is inconsistent with both theoretical and experimental work. We propose the expo-power function as an alternative to the power function and examine its ability to explain choices in Allais experiments.

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File URL: http://www.sciencedirect.com/science/article/B6V84-4X6VMBY-2/2/7a78c10ee80a63cd763d7aebe5baca40
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Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 105 (2009)
Issue (Month): 3 (December)
Pages: 326-329

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Handle: RePEc:eee:ecolet:v:105:y:2009:i:3:p:326-329
Contact details of provider: Web page: http://www.elsevier.com/locate/ecolet

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  9. Neilson, William S & Stowe, Jill, 2002. " A Further Examination of Cumulative Prospect Theory Parameterizations," Journal of Risk and Uncertainty, Springer, vol. 24(1), pages 31-46, January.
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  13. Conlisk, John, 1989. "Three Variants on the Allais Example," American Economic Review, American Economic Association, vol. 79(3), pages 392-407, June.
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