Theory and Decision 77 (2):153-182 (2014)

Abstract
This study extends experimental tests of (cumulative) prospect theory (PT) over prospects with more than three outcomes and tests second-order stochastic dominance principles (Levy and Levy, Management Science 48:1334–1349, 2002; Baucells and Heukamp, Management Science 52:1409–1423, 2006). It considers choice behavior of people facing prospects of three different types: gain prospects (losing is not possible), loss prospects (gaining is not possible), and mixed prospects (both gaining and losing are possible). The data supports the distinction of risk behavior into these three categories of prospects, Further, probability weighting and diminishing sensitivity of utility as predicted by PT are observed. Loss aversion is, however, less pronounced, except for choices where one prospect is degenerate. The data suggests that the probability of losing may be relevant for loss aversion
Keywords Binary choice  Loss aversion  Prospect theory   Probability weighting  Second-order stochastic dominance
Categories (categorize this paper)
ISBN(s)
DOI 10.1007/s11238-013-9396-x
Options
Edit this record
Mark as duplicate
Export citation
Find it on Scholar
Request removal from index
Revision history

Download options

PhilArchive copy


Upload a copy of this paper     Check publisher's policy     Papers currently archived: 69,959
External links

Setup an account with your affiliations in order to access resources via your University's proxy server
Configure custom proxy (use this if your affiliation does not provide a proxy)
Through your library

References found in this work BETA

Prospect Theory: For Risk and Ambiguity.Peter P. Wakker - 2010 - Cambridge University Press.
Prospect Theory: An Analysis of Decision Under Risk.D. Kahneman & A. Tversky - 1979 - Econometrica: Journal of the Econometric Society:263--291.

Add more references

Citations of this work BETA

Add more citations

Similar books and articles

On Probabilities and Loss Aversion.Horst Zank - 2010 - Theory and Decision 68 (3):243-261.
Market Failure in Light of Non-Expected Utility.Eyal Baharad & Doron Kliger - 2013 - Theory and Decision 75 (4):599-619.
On Loss Aversion in Bimatrix Games.Bram Driesen, Andrés Perea & Hans Peters - 2010 - Theory and Decision 68 (4):367-391.

Analytics

Added to PP index
2013-12-01

Total views
44 ( #256,880 of 2,504,832 )

Recent downloads (6 months)
1 ( #417,030 of 2,504,832 )

How can I increase my downloads?

Downloads

My notes