Prospect Theory and consumer behavior: Goals and Tradeoffs
I show that a loss averse consumer who must share her budget between two goods prefer allocations for which consumption equals reference point for at least one good. The phenomenon intensity depends on the curvature of the utility curve. These results are consistent with several stylized facts which cannot be explained by the standard consumer theory.
|Date of creation:||Mar 2013|
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|Note:||View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00820722|
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