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prospect theory

A Review of Prospect Theory

A Review of Prospect Theory

... the theory of expected ef- ...the prospect theory may have some limitations in the following two aspects: First of all, the value function and weight function need to be further ...of prospect ...

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Identification of parameters for a prospect theory model for travel choice analysis

Identification of parameters for a prospect theory model for travel choice analysis

... travelers interpret, process and use information on reliability. Descriptive research on travel behavior has found a wealth of empirical evidence concerning travelers’ bounded rationality, cognitive errors and heuristic ...

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Commutative Prospect Theory and Stopped Behavioral Processes for Fair Gambles

Commutative Prospect Theory and Stopped Behavioral Processes for Fair Gambles

... of prospect theory’s function space including its sample space ...our theory to fair gambles, and report results under various scenarios of probability ...

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Multi Outcome Lotteries: Prospect Theory vs  Relative Utility

Multi Outcome Lotteries: Prospect Theory vs Relative Utility

... Cumulative Prospect Theory model pa rameters were derived using two outcome lotteries ...the theory to multi outcome lotteries has only been justified by a mathematical proof based on pretty com plex ...

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Exaggerated Risk: Prospect Theory and Probability Weighting in Risky Choice

Exaggerated Risk: Prospect Theory and Probability Weighting in Risky Choice

... otherwise y” should evoke the same preference order across different decision domains. Accordingly, a 1% chance of losing £300 or a sure loss of £60 and a1% chance of an insurable event of losing £300 or paying £60 for ...

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Is Cumulative Prospect Theory a Serious Alternative for the Expected Utility Paradigm?

Is Cumulative Prospect Theory a Serious Alternative for the Expected Utility Paradigm?

... Cumulative Prospect Theory - the idea, which now in view of the models introduced in the preceding sections, makes perfect ...Cumulative Prospect Theory is shown to combine core elements of ...

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Expected Utility Preferences versus Prospect Theory Preferences in Bargaining

Expected Utility Preferences versus Prospect Theory Preferences in Bargaining

... which prospect theory (Kahnemann and Tversky (1979, 1992)) is arguably the most comprehensive competing alternative – it is argued that (individuals with) non-expected utility preferences could be persuaded ...

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Loss aversion and ruinous optimal wagers in cumulative prospect theory

Loss aversion and ruinous optimal wagers in cumulative prospect theory

... Peel, David and David Law, (2007b) "Betting on odds on Favorites as an Optimal Choice in Cumulative Prospect Theory." Economics Bulletin, Vol. 4, No. 26 pp. 1-10. Rieger, M.0 and T.Bui. (2011) “Too ...

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Prospect theory and the effects of bankruptcy laws on entrepreneurial aspirations

Prospect theory and the effects of bankruptcy laws on entrepreneurial aspirations

... that prospect theory offers a theoret- ical explanation when focusing on potential entrepre- neurs, who are characterised by loss aversion when comparing the potential gains and losses to their wealth and ...

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Geographic profiling of lone wolf terrorists: the application of economics, game theory and prospect theory

Geographic profiling of lone wolf terrorists: the application of economics, game theory and prospect theory

... This paper presents an economic analysis of the choices made by lone wolf terrorists. Using RAND-MIPT data about the fatalities that are inflicted by different attack methods, the paper develops an analysis on a ...

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Why Do People Pay Taxes? Prospect Theory Versus Expected Utility Theory

Why Do People Pay Taxes? Prospect Theory Versus Expected Utility Theory

... The solution to the tax evasion problem under prospect theory, when the probability of detection is …xed, is a bang-bang solution. We would argue that the bang-bang solution seems descriptive of several ...

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Behavioral Finance in Brazil: applying the prospect theory to potential investors

Behavioral Finance in Brazil: applying the prospect theory to potential investors

... Tversky’s Prospect Theory (1979), questions the Expected Utility Theory, an important element of Neoclassical Economics, as basis for decision- ...

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Static Portfolio Choice under Cumulative Prospect Theory

Static Portfolio Choice under Cumulative Prospect Theory

... Cumulative Prospect Theory to study an economic agent’s decision making seems to be consistent with adopting new performance ...Cumulative Prospect Theory may certainly be a better model than ...

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Prospect theory and identity: Why leaders take risks against all odds

Prospect theory and identity: Why leaders take risks against all odds

... Prospect theory was developed to explain anomalies, but as mentioned, some cases leave even prospect theorists at a loss for ...the prospect of gain may be caused by a tendency to overweight ...

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Using Prospect Theory To Explain The Setting Of The Expected Rate Of Return On Pension Assets

Using Prospect Theory To Explain The Setting Of The Expected Rate Of Return On Pension Assets

... One critical issue when applying prospect theory is determining the reference point. The reference point is usually some aspect of the decision maker’s current stage and is likely to be perceptually salient ...

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Exploiting prospect theory and risk awareness to protect UAV assisted network operation

Exploiting prospect theory and risk awareness to protect UAV assisted network operation

... The theory of the tragedy of the commons is used to capture the probability of failure of the CPR, while the prospect theory is adopted to study the normal and malicious users’ risk-aware behavior in ...

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Trust under the prospect theory and quasi-hyperbolic preferences: a field experiment in Vietnam

Trust under the prospect theory and quasi-hyperbolic preferences: a field experiment in Vietnam

... the prospect theory and of hyperbolic time discounting allows us to identify aspects of the relationships between trust and risk and time preferences that could not be uncovered by previous studies using ...

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Examining Price Perceptions of State Parks' Dual-Pricing Practice with Prospect Theory

Examining Price Perceptions of State Parks' Dual-Pricing Practice with Prospect Theory

... to prospect theory, it would be easier for tourists to forego a discount than to accept a surcharge because the discount framing is perceived as gains and the surcharge frame is perceived as losses (Tversky ...

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Risk Decision Making Based on Cloud Theory and Prospect Theory for Conditional Maintenance of Power Transformer

Risk Decision Making Based on Cloud Theory and Prospect Theory for Conditional Maintenance of Power Transformer

... cloud theory into solving the issue of the quantitative representation of the qualitative evaluation in power transformer condition ...the prospect theory and establish the corresponding ...

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Insurance premium calculation under continuous cumulative prospect theory

Insurance premium calculation under continuous cumulative prospect theory

... utility theory. In the literature related to prospect theory, in its original and cumulative versions, and rank dependent utility theory, several functional forms of probability weighting ...

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