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

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  • Peel, D.A.
  • Zhang, Jie

Abstract

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.

Suggested Citation

  • Peel, D.A. & Zhang, Jie, 2009. "The expo-power value function as a candidate for the work-horse specification in parametric versions of cumulative prospect theory," Economics Letters, Elsevier, vol. 105(3), pages 326-329, December.
  • Handle: RePEc:eee:ecolet:v:105:y:2009:i:3:p:326-329
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    References listed on IDEAS

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