A TEST OF PROSPECT THEORY: THE CORRELATION BETWEEN UNEXPLAINED VARIANCE OF RETURN AND TARGET RETURN IN THE COMMERCIAL BANKING INDUSTRY

This study analyzes the variability of rates of return for 11,772 U.S. commercial banks from 1979 through 1985. The objective is to determine whether variability that is not explained by exogenous variables can be explained by prospect theory. Below target, strong correlations are shown, consistent with prospect theory. When regression analysis is applied, the results are confirmed.

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Year of publication:	1993
Authors:	Johnson, Hazel J.
Published in:	Studies in Economics and Finance. - MCB UP Ltd, ISSN 1755-6791, ZDB-ID 2070355-7. - Vol. 14.1993, 2, p. 15-42
Publisher:	MCB UP Ltd

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Type of publication:	Article
Type of publication (narrower categories):	review-article
Language:	English
Other identifiers:	10.1108/eb028702 [DOI]
Source:	Other ZBW resources

Persistent link: https://www.econbiz.de/10015013791