Cumulative Prospect Theory as a model of economic rationality
Author
Abstract
Suggested Citation
Download full text from publisher
References listed on IDEAS
- Wakker, Peter P, 2001. "Testing and Characterizing Properties of Nonadditive Measures through Violations of the Sure-Thing Principle," Econometrica, Econometric Society, vol. 69(4), pages 1039-1059, July.
- Loewenstein, George, 1996. "Out of Control: Visceral Influences on Behavior," Organizational Behavior and Human Decision Processes, Elsevier, vol. 65(3), pages 272-292, March.
- Peter Diamond & Hannu Vartiainen, 2007. "Introduction to Behavioral Economics and Its Applications," Introductory Chapters, in: Peter Diamond & Hannu Vartiainen (ed.),Behavioral Economics and Its Applications, Princeton University Press.
- Shlomo Benartzi & Richard H. Thaler, 1995.
"Myopic Loss Aversion and the Equity Premium Puzzle,"
The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(1), pages 73-92.
- Shlomo Benartzi & Richard H. Thaler, 1993. "Myopic Loss Aversion and the Equity Premium Puzzle," NBER Working Papers 4369, National Bureau of Economic Research, Inc.
- Maital, Shlomo, 2004. "Daniel Kahneman: on redefining rationality," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 33(1), pages 1-14, March.
- Gigerenzer, Gerd & Todd, Peter M. & ABC Research Group,, 2000. "Simple Heuristics That Make Us Smart," OUP Catalogue, Oxford University Press, number 9780195143812.
- Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
- Mohammed Abdellaoui & Han Bleichrodt & Corina Paraschiv, 2007.
"Loss Aversion Under Prospect Theory: A Parameter-Free Measurement,"
Management Science, INFORMS, vol. 53(10), pages 1659-1674, October.
- H. Bleichrodt & C. Paraschiv & Mohammed Abdellaoui, 2007. "Loss Aversion Under Prospect Theory: A Parameter-Free Measurement," Post-Print hal-00457047, HAL.
- Wu, George & Gonzalez, Richard, 1998. "Common Consequence Conditions in Decision Making under Risk," Journal of Risk and Uncertainty, Springer, vol. 16(1), pages 115-139, April.
- Han Bleichrodt & Jose Luis Pinto, 2000. "A Parameter-Free Elicitation of the Probability Weighting Function in Medical Decision Analysis," Management Science, INFORMS, vol. 46(11), pages 1485-1496, November.
- Booij, Adam S. & van de Kuilen, Gijs, 2009. "A parameter-free analysis of the utility of money for the general population under prospect theory," Journal of Economic Psychology, Elsevier, vol. 30(4), pages 651-666, August.
- Vernon L. Smith, 1962.
"An Experimental Study of Competitive Market Behavior,"
Journal of Political Economy, University of Chicago Press, vol. 70(3), pages 322-322.
- Vernon L. Smith, 1962. "An Experimental Study of Competitive Market Behavior," Journal of Political Economy, University of Chicago Press, vol. 70(2), pages 111-111.
- Loomes, Graham & Sugden, Robert, 1982. "Regret Theory: An Alternative Theory of Rational Choice under Uncertainty," Economic Journal, Royal Economic Society, vol. 92(368), pages 805-824, December.
- George Wu & Richard Gonzalez, 1999. "Nonlinear Decision Weights in Choice Under Uncertainty," Management Science, INFORMS, vol. 45(1), pages 74-85, January.
- Lester, Bijou Yang, 2011. "An exploratory analysis of composite choices: Weighing rationality versus irrationality," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(6), pages 949-958.
- Peter Wakker & Daniel Deneffe, 1996. "Eliciting von Neumann-Morgenstern Utilities When Probabilities Are Distorted or Unknown," Management Science, INFORMS, vol. 42(8), pages 1131-1150, August.
- Thaler, Richard, 1981. "Some empirical evidence on dynamic inconsistency," Economics Letters, Elsevier, vol. 8(3), pages 201-207.
- Richard H. Thaler, 2008.
"Mental Accounting and Consumer Choice,"
Marketing Science, INFORMS, vol. 27(1), pages 15-25, 01-02.
- Richard Thaler, 1985. "Mental Accounting and Consumer Choice," Marketing Science, INFORMS, vol. 4(3), pages 199-214.
- Henry Stott, 2006. "Cumulative prospect theory's functional menagerie," Journal of Risk and Uncertainty, Springer, vol. 32(2), pages 101-130, March.
- Warneryd, Karl-Erik, 1996. "Risk attitudes and risky behavior," Journal of Economic Psychology, Elsevier, vol. 17(6), pages 749-770, December.
- Andreas Glöckner & Tilmann Betsch, 2008. "Do People Make Decisions Under Risk Based on Ignorance? An Empirical Test of the Priority Heuristic against Cumulative Prospect Theory," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2008_05, Max Planck Institute for Research on Collective Goods.
- Daniel Kahneman & Amos Tversky, 2013.
"Prospect Theory: An Analysis of Decision Under Risk,"
World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127,
World Scientific Publishing Co. Pte. Ltd..
- Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
- Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
- Camerer, Colin F & Ho, Teck-Hua, 1994. "Violations of the Betweenness Axiom and Nonlinearity in Probability," Journal of Risk and Uncertainty, Springer, vol. 8(2), pages 167-196, March.
- repec:cup:judgdm:v:1:y:2006:i::p:159-161 is not listed on IDEAS
- Glimcher, Paul W. & Dorris, Michael C. & Bayer, Hannah M., 2005. "Physiological utility theory and the neuroeconomics of choice," Games and Economic Behavior, Elsevier, vol. 52(2), pages 213-256, August.
- B. Douglas Bernheim & Jonathan Skinner & Steven Weinberg, 2001.
"What Accounts for the Variation in Retirement Wealth among U.S. Households?,"
American Economic Review, American Economic Association, vol. 91(4), pages 832-857, September.
- B. Douglas Bernheim & Jonathan Skinner & Steven Weinberg, 1997. "What Accounts for the Variation in Retirement Wealth Among U.S. Households?," Working Papers 97035, Stanford University, Department of Economics.
- B. Douglas Bernheim & Jonathan Skinner & Steven Weinberg, 1997. "What Accounts for the Variation in Retirement Wealth Among U.S. Households?," NBER Working Papers 6227, National Bureau of Economic Research, Inc.
- Hinloopen,Jeroen (ed.), 2011. "Experiments and Competition Policy," Cambridge Books, Cambridge University Press, number 9781107403611, September.
- Samuelson, William & Zeckhauser, Richard, 1988. "Status Quo Bias in Decision Making," Journal of Risk and Uncertainty, Springer, vol. 1(1), pages 7-59, March.
- Frör, Oliver, 2008. "Bounded rationality in contingent valuation: Empirical evidence using cognitive psychology," Ecological Economics, Elsevier, vol. 68(1-2), pages 570-581, December.
- McFadden, Daniel, 1999.
"Rationality for Economists?,"
Journal of Risk and Uncertainty, Springer, vol. 19(1-3), pages 73-105, December.
- Daniel McFadden, 1998. "Rationality for Economists?," Working Papers 98-09-086, Santa Fe Institute.
- Akerlof, George A & Yellen, Janet L, 1985. "Can Small Deviations from Rationality Make Significant Differences to Economic Equilibria?," American Economic Review, American Economic Association, vol. 75(4), pages 708-720, September.
- Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
- George Loewenstein & Drazen Prelec, 1992. "Anomalies in Intertemporal Choice: Evidence and an Interpretation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 573-597.
- repec:cup:judgdm:v:5:y:2010:i:3:p:159-163 is not listed on IDEAS
- Daniel Kahneman, 2003. "Maps of Bounded Rationality: Psychology for Behavioral Economics," American Economic Review, American Economic Association, vol. 93(5), pages 1449-1475, December.
- Abdellaoui, Mohammed & Barrios, Carolina & Wakker, Peter P., 2007. "Reconciling introspective utility with revealed preference: Experimental arguments based on prospect theory," Journal of Econometrics, Elsevier, vol. 138(1), pages 356-378, May.
- Altman, Morris, 2012. "Implications of behavioural economics for financial literacy and public policy," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(5), pages 677-690.
- Helga Fehr & Thomas Epper & Adrian Bruhin & Renate Schubert, 2007. "Risk and Rationality: The Effect of Incidental Mood on Probability Weighting," SOI - Working Papers 0703, Socioeconomic Institute - University of Zurich.
- Paul A. Samuelson, 1937. "A Note on Measurement of Utility," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 4(2), pages 155-161.
- Yang, Bijou & Lester, David, 2008. "Reflections on rational choice--The existence of systematic irrationality," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(3), pages 1218-1233, June.
- Bertrand, Marianne & Shafir, Eldar & Mullainathan, Sendhil, 2006. "Behavioral Economics and Marketing in Aid of Decision Making Among the Poor," Scholarly Articles 2962609, Harvard University Department of Economics.
- Luce, R Duncan & Fishburn, Peter C, 1991. "Rank- and Sign-Dependent Linear Utility Models for Finite First-Order Gambles," Journal of Risk and Uncertainty, Springer, vol. 4(1), pages 29-59, January.
- Glöckner, Andreas & Betsch, Tilmann, 2008. "Do people make decisions under risk based on ignorance? An empirical test of the priority heuristic against cumulative prospect theory," Organizational Behavior and Human Decision Processes, Elsevier, vol. 107(1), pages 75-95, September.
- John W. Payne & Dan J. Laughhunn & Roy Crum, 1981. "Note---Further Tests of Aspiration Level Effects in Risky Choice Behavior," Management Science, INFORMS, vol. 27(8), pages 953-958, August.
- Sendhil Mullainathan, 2002. "A Memory-Based Model of Bounded Rationality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(3), pages 735-774.
- Schmidt, Ulrich & Traub, Stefan, 2002. "An Experimental Test of Loss Aversion," Journal of Risk and Uncertainty, Springer, vol. 25(3), pages 233-249, November.
- Elke U. Weber & Christopher Hsee, 1998. "Cross-Cultural Differences in Risk Perception, but Cross-Cultural Similarities in Attitudes Towards Perceived Risk," Management Science, INFORMS, vol. 44(9), pages 1205-1217, September.
- Vriend, Nicolaas J., 1996. "Rational behavior and economic theory," Journal of Economic Behavior & Organization, Elsevier, vol. 29(2), pages 263-285, March.
- Mohammed Abdellaoui, 2000. "Parameter-Free Elicitation of Utility and Probability Weighting Functions," Management Science, INFORMS, vol. 46(11), pages 1497-1512, November.
Most related items
These are the items that most often cite the same works as this one and are cited by the same works as this one.- Jakusch, Sven Thorsten & Meyer, Steffen & Hackethal, Andreas, 2019. "Taming models of prospect theory in the wild? Estimation of Vlcek and Hens (2011)," SAFE Working Paper Series 146, Leibniz Institute for Financial Research SAFE, revised 2019.
- Attema, Arthur E. & Brouwer, Werner B.F. & l’Haridon, Olivier, 2013.
"Prospect theory in the health domain: A quantitative assessment,"
Journal of Health Economics, Elsevier, vol. 32(6), pages 1057-1065.
- Attema, Arthur & Brouwer, Werner & l'Haridon, Olivier, 2013. "Prospect theory in the health domain: a quantitative assessment," MPRA Paper 44207, University Library of Munich, Germany.
- Arthur E. Attema & Werner B.F. Brouwer & Olivier L’haridon, 2013. "Prospect theory in the health domain: A quantitative assessment," Post-Print halshs-00866788, HAL.
- Adam Booij & Bernard Praag & Gijs Kuilen, 2010.
"A parametric analysis of prospect theory’s functionals for the general population,"
Theory and Decision, Springer, vol. 68(1), pages 115-148, February.
- Booij, Adam S. & van Praag, Bernard M. S. & van de Kuilen, Gijs, 2009. "A Parametric Analysis of Prospect Theory's Functionals for the General Population," IZA Discussion Papers 4117, Institute of Labor Economics (IZA).
- Adam S. Booij & Bernard M.S. Van Praag & Gijs Van De Kuilen & Bernard M.S. van Praag, 2009. "A Parametric Analysis of Prospect Theory's Functionals for the General Population," CESifo Working Paper Series 2609, CESifo.
- Horst Zank, 2010. "On probabilities and loss aversion," Theory and Decision, Springer, vol. 68(3), pages 243-261, March.
- Glenn W. Harrison & J. Todd Swarthout, 2016. "Cumulative Prospect Theory in the Laboratory: A Reconsideration," Experimental Economics Center Working Paper Series 2016-04, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
- Jinrui Pan & Craig S. Webb & Horst Zank, 2019. "Delayed probabilistic risk attitude: a parametric approach," Theory and Decision, Springer, vol. 87(2), pages 201-232, September.
- Peter Brooks & Horst Zank, 2005. "Loss Averse Behavior," Journal of Risk and Uncertainty, Springer, vol. 31(3), pages 301-325, December.
- Mohammed Abdellaoui & Olivier L'Haridon & Corina Paraschiv, 2011.
"Experienced vs. Described Uncertainty: Do We Need Two Prospect Theory Specifications?,"
Management Science, INFORMS, vol. 57(10), pages 1879-1895, October.
- Mohammed Abdellaoui & Olivier L'Haridon & Corina Paraschiv, 2011. "Experienced vs. Described Uncertainty: Do We Need Two Prospect Theory Specifications?," Post-Print hal-00638008, HAL.
- Booij, Adam S. & van de Kuilen, Gijs, 2009. "A parameter-free analysis of the utility of money for the general population under prospect theory," Journal of Economic Psychology, Elsevier, vol. 30(4), pages 651-666, August.
- Jakusch, Sven Thorsten, 2017. "On the applicability of maximum likelihood methods: From experimental to financial data," SAFE Working Paper Series 148, Leibniz Institute for Financial Research SAFE, revised 2017.
- Ulrich Schmidt & Horst Zank, 2012.
"A genuine foundation for prospect theory,"
Journal of Risk and Uncertainty, Springer, vol. 45(2), pages 97-113, October.
- Ulrich Schmidt & Horst Zank, 2011. "A Genuine Foundation for Prospect Theory," Economics Discussion Paper Series 1114, Economics, The University of Manchester.
- Simon Gächter & Eric J. Johnson & Andreas Herrmann, 2022.
"Individual-level loss aversion in riskless and risky choices,"
Theory and Decision, Springer, vol. 92(3), pages 599-624, April.
- Gächter, Simon & Johnson, Eric J. & Herrmann, Andreas, 2007. "Individual-Level Loss Aversion in Riskless and Risky Choices," IZA Discussion Papers 2961, Institute of Labor Economics (IZA).
- Simon Gaechter & Eric J. Johnson & Andreas Herrmann, 2010. "Individual-level loss aversion in riskless and risky choices," Discussion Papers 2010-20, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
- Simon Gaechter & Eric Johnson & Andreas Herrmann, 2007. "Individual-Level Loss Aversion In Riskless And Risky Choices," Discussion Papers 2007-02, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
- Mohammed Abdellaoui & Han Bleichrodt & Corina Paraschiv, 2007.
"Loss Aversion Under Prospect Theory: A Parameter-Free Measurement,"
Management Science, INFORMS, vol. 53(10), pages 1659-1674, October.
- H. Bleichrodt & C. Paraschiv & Mohammed Abdellaoui, 2007. "Loss Aversion Under Prospect Theory: A Parameter-Free Measurement," Post-Print hal-00457047, HAL.
- Mohammed Abdellaoui & Han Bleichrodt & Olivier l'Haridon & Corina Paraschiv, 2013.
"Is There One Unifying Concept of Utility?An Experimental Comparison of Utility Under Risk and Utility Over Time,"
Management Science, INFORMS, vol. 59(9), pages 2153-2169, September.
- Mohammed Abdellaoui & Han Bleichrodt & Olivier L’haridon & Corina Paraschiv, 2013. "Is There One Unifying Concept of Utility?An Experimental Comparison of Utility Under Risk and Utility Over Time," Post-Print halshs-00816056, HAL.
- Eduard Marinov, 2017. "The 2017 Nobel Prize in Economics," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 117-159.
- Committee, Nobel Prize, 2017. "Richard H. Thaler: Integrating Economics with Psychology," Nobel Prize in Economics documents 2017-1, Nobel Prize Committee.
- Marc Oliver Rieger & Mei Wang & Thorsten Hens, 2015. "Risk Preferences Around the World," Management Science, INFORMS, vol. 61(3), pages 637-648, March.
- Simon Gaechter & Eric Johnson & Andreas Herrmann, 2007.
"Individual-Level Loss Aversion In Riskless And Risky Choices,"
Discussion Papers
2007-02, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
- Simon Gaechter & Eric J. Johnson & Andreas Herrmann, 2010. "Individual-level loss aversion in riskless and risky choices," Discussion Papers 2010-20, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
- Simon Gaechter & Eric Johnson & Andreas Herrmann, 2007. "Individual-Level Loss Aversion In Riskless And Risky Choices," Discussion Papers 2007-02, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
- Simon Gaechter & Eric J. Johnson & Andreas Herrmann, 2010. "Individual-level loss aversion in riskless and risky choices," Discussion Papers 2010-20, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
- Gächter, Simon & Johnson, Eric J. & Herrmann, Andreas, 2007. "Individual-Level Loss Aversion in Riskless and Risky Choices," IZA Discussion Papers 2961, Institute of Labor Economics (IZA).
- Mohammed Abdellaoui & Han Bleichrodt & Olivier L’Haridon, 2008. "A tractable method to measure utility and loss aversion under prospect theory," Journal of Risk and Uncertainty, Springer, vol. 36(3), pages 245-266, June.
- Mohammed Abdellaoui & Han Bleichrodt & Olivier l’Haridon, 2013.
"Sign-dependence in intertemporal choice,"
Journal of Risk and Uncertainty, Springer, vol. 47(3), pages 225-253, December.
- Mohammed Abdellaoui & Han Bleichrodt & Olivier L’haridon, 2013. "Sign-dependence in intertemporal choice," Post-Print halshs-00846590, HAL.
More about this item
Keywords
rationality; expected utility theory; prospect theory; cumulative prospect theory; probability weighting; risk aversion;All these keywords.
Statistics
Access and download statisticsCorrections
All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eko:ekoeko:31_71. See general information about how to correct material in RePEc.
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/fesuwpl.html .
Please note that corrections may take a couple of weeks to filter through the various RePEc services.