A value function that explains the magnitude and sign effects

Loewenstein and Prelec (1992) explain the 'magnitude effect' and the 'sign effect', respectively, by using increasing elasticity of the value function and a higher elasticity for losses as compared to gains. We provide a value function with these two properties.

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Year of publication:	2009
Authors:	al-Nowaihi, Ali ; Dhami, Sanjit
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 105.2009, 3, p. 224-229
Publisher:	Elsevier
Keywords:	Anomalies of the exponentially discounted utility model The magnitude effect The sign effect SIE value functions

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008474032